GOVERNANCE REVIEW

MAY, 2008
Final Report

PEFC

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TABLE OF CONTENTS
MANAGEMENT SUMMARY ...................................................................................................................5 INTRODUCTION ...........................................................................................................................................5 RECOMMENDATIONS .................................................................................................................................. 7 Phase One – Get Resourced .................................................................................................................7 Phase Two – Get Structured.................................................................................................................9 Phase Three – Get Engaged ...............................................................................................................11 Phase Four – Get Influential..............................................................................................................13 REVISED PEFC ORGANISATIONAL BODIES .............................................................................................14 REVISED PEFC ORGANISATIONAL STRUCTURE .....................................................................................15 REVISED PEFC ASSESSMENT, ENDORSEMENT AND MUTUAL RECOGNITION PROCESS .......................16 I. INTRODUCTION..................................................................................................................................17 PEFC STRATEGIC PLAN ...........................................................................................................................17 MANDATE .................................................................................................................................................17 PANEL ........................................................................................................................................................17 PREVIOUS ANALYSIS ................................................................................................................................18 FINDINGS ...................................................................................................................................................18 II. METHODOLOGY ................................................................................................................................19 III. ORGANISATIONAL REVIEW........................................................................................................21 BACKGROUND ...........................................................................................................................................21 PEFC REVIEW ..........................................................................................................................................22 RECOMMENDATIONS BY CATEGORY .......................................................................................................24 Transparency.......................................................................................................................................24 Participation........................................................................................................................................25 Evaluation............................................................................................................................................25 Complaint and Response ....................................................................................................................26 IV. ISSUES ASSESSMENT - “WHAT COULD BE BETTER?”.......................................................27 GOVERNANCE MODELS ............................................................................................................................27 Balance of Power (Members, Board, Secretariat)............................................................................28 ‘Bottom-Up’ versus ‘Top-Down’ .......................................................................................................28 Inclusiveness........................................................................................................................................29 Transparency.......................................................................................................................................30 ORGANISATIONAL STRUCTURE AND MANAGEMENT ..............................................................................31 Members’ Expectations versus Organisational Capacity ................................................................32 Board Workload/Focus.......................................................................................................................32 Technical Resources Insufficient .......................................................................................................33 Complementary Initiatives/Investments.............................................................................................33 STAKEHOLDER GROUPS............................................................................................................................33 ‘Low-Hanging Fruit’ Has Been Harvested .......................................................................................34 Lack of Diverse Stakeholder Representation ....................................................................................34 Levels of Integration and Influence ...................................................................................................35 STANDARDS ..............................................................................................................................................36 Variance in Robustness of PEFC Member Standards......................................................................36 ‘Meta-Standard’ Could Also Be More Robust ..................................................................................37 ‘Northern-Hemisphere’ Standard Barrier to New Members ...........................................................37 Panel of Experts Insufficiently Robust, Clear ...................................................................................38 EXTERNAL PERCEPTIONS .........................................................................................................................38 Poor Global Awareness of PEFC ......................................................................................................38 “PEFC is Industry-Driven” ...............................................................................................................39 ‘First Impressions’ are Opaque .........................................................................................................39 OTHER I SSUES ...........................................................................................................................................40 Organisational Conflict – FSC, ENGOs ...........................................................................................40 ‘Flash-point’ Issues ............................................................................................................................41

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‘Next Generation’ Challenges............................................................................................................41 V. OPTIONS - “WHAT COULD WE DO ABOUT IT?” ....................................................................42 EXTERNAL PERCEPTIONS OF PEFC..........................................................................................................42 Focus On - Transparency and Public Information...........................................................................42 Focus On – Changing Critics from Within .......................................................................................43 Focus On – Inclusion to Transform the Organisation......................................................................43 Options - External Perceptions of PEFC ..........................................................................................43 PEFC EFFECTIVENESS ..............................................................................................................................44 Focus On – Standards and Enforcement...........................................................................................44 Focus On – Operations and Administration .....................................................................................45 Focus On – Members and Board .......................................................................................................45 Options - PEFC Effectiveness ............................................................................................................45 PEFC'S RULES AND STANDARDS .............................................................................................................46 Focus On – National Standards and Quality ....................................................................................47 Focus On – PEFC Meta-standard and Quality ................................................................................47 Focus On – Additional or Parallel Criteria......................................................................................47 Options – Rules and Standards ..........................................................................................................48 IMPLEMENTATION AND MONITORING OF GOVERNANCE ........................................................................49 Focus On – Centralising Decision-Making Power...........................................................................49 Focus On – Open Membership to All Stakeholders..........................................................................49 Focus On – Trouble-shooting: Engage and Broker .........................................................................49 Options – Implementation and Monitoring of Governance .............................................................50 “BUY-IN" FROM PEFC'S EXISTING STAKEHOLDERS ...............................................................................51 Focus On – Increase Support and Value to Members ......................................................................51 Focus On – Expand Market Share.....................................................................................................51 Focus On – Simplify, Clarify, and Improve Efficiency.....................................................................52 Options – ‘Buy-In’ from Existing Stakeholders ................................................................................52 DIALOGUE WITH ENVIRONMENTAL NON-GOVERNMENT ORGANISATIONS (ENGOS) ..........................53 Focus On – Marketing Push...............................................................................................................53 Focus On – Identify and Partner with One Key ENGO ...................................................................53 Focus On – Open Membership to ENGOs ........................................................................................54 Options – Dialogue with ENGOs.......................................................................................................54 VI. RECOMMENDATIONS - “SO WHAT NOW?” ...........................................................................56 PHASE ONE – GET RESOURCED ...............................................................................................................56 1. Publish Governance Review.......................................................................................................56 2. Establish International Headquarters .......................................................................................56 3. Review Board By-Laws (Executive Committee)........................................................................57 4. Update Staff Position Descriptions............................................................................................57 5. Delegate Operational Authority to Heads of Unit....................................................................57 6. Quantify PEFC ‘Impact’ ............................................................................................................57 7. Commit to the ‘High Road’ ........................................................................................................58 8. Apply the ‘Plain-English’ Principle ..........................................................................................58 9. Promote a ‘Management-Summary’ Practice ..........................................................................58 10. Update Website for Accessibility .............................................................................................58 11. Invest in Marketing Capacity...................................................................................................59 12. Join Stakeholder Initiatives......................................................................................................59 13. PEFC International Conference on Forestry and the Environment .....................................60 14. Develop Annual Internal Governance ‘Check-Up’ ................................................................60 15. Volunteer for One World Trust’s Governance Review...........................................................60 PHASE TWO – G ET STRUCTURED .............................................................................................................61 16. Strategically Update Board Model..........................................................................................61 17. Focus Board Role .....................................................................................................................61 18. Recruit Additional Stakeholders into National Governing Bodies (NGBs) ..........................61 19. Expand ‘Extraordinary Members’ into a Forum....................................................................62 20. Add Stakeholder Forum ‘Right of Agenda’.............................................................................62 21. Expand Secretariat Capacity ...................................................................................................62 22. Tighten Independent Consultant and Panel of Experts’ Role................................................63 23. Launch Tropical Initiative........................................................................................................63

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Add Fundraising Capacity .......................................................................................................64 Increase Support to Members ..................................................................................................64 Sponsor Applied Research in Environmental Impact.............................................................64 Create ‘Entry-Level’ Tier of Endorsement..............................................................................64 Provide Capacity-Building Assistance ....................................................................................65 PHASE THREE – GET ENGAGED ...............................................................................................................65 29. Post Position Descriptions for ‘Seconded’ Staff.....................................................................65 30. Nominate Two Board Members from Forum ..........................................................................65 31. Nominate Members of the Panel of Experts from Forum ......................................................66 32. Name Board Member to Chair Stakeholder Forum ...............................................................66 33. Revise Engagement Between Board and PEFC International Headquarters ......................66 34. Review and Clarify PEFC Complaints and Appeals Procedures..........................................66 35. Reduce Number of Board and General Assembly Meetings ..................................................67 36. Leverage Engagement with FSC..............................................................................................67 37. Give Stakeholder Forum Votes in the General Assembly ......................................................67 PHASE FOUR – GET INFLUENTIAL ............................................................................................................68 38. Lead Forestry Policy on Carbon .............................................................................................68 39. Update PEFC Brand ................................................................................................................68 APPENDICES .............................................................................................................................................69 A. INTERNATIONAL OVERSIGHT PANEL BIOGRAPHIES ...........................................................................70 Jamie Lindsay, Chair..........................................................................................................................70 Björn Andrén .......................................................................................................................................70 Jon Dee ................................................................................................................................................70 Dr Johannes (Hans) Drielsma ...........................................................................................................72 Dr. Maharaj Muthoo...........................................................................................................................72 Frederick M. O’Regan........................................................................................................................73 Dirk Teegelbekkers .............................................................................................................................73 B. INTERNATIONAL OVERSIGHT PANEL TERMS OF REFERENCE ............................................................75 C. PEFC GOVERNANCE SURVEY .............................................................................................................77 D. GOVERNANCE RECOMMENDATIONS BY SUBJECT AREA....................................................................88 E. PEFC STAKEHOLDER FORUM .............................................................................................................91 F. PEFC ORGANISATIONAL STRUCTURE ................................................................................................93 G. PEFC ASSESSMENT, ENDORSEMENT AND MUTUAL RECOGNITION PROCESS ..................................96 H. ‘EVALUATING LEGITIMACY AND QUALITY OF FOREST GOVERNANCE’ BY TIM CADMAN ..............98

24. 25. 26. 27. 28.

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MANAGEMENT SUMMARY
Introduction The PEFC Council (Programme for the Endorsement of Forest Certification schemes) is an independent, non-profit, non-governmental organisation, which promotes sustainably managed forests through independent third party certification. To this end, PEFC provides an assurance mechanism to purchasers of wood and paper products that they are promoting the sustainable management of forests. PEFC was launched on the 30th June 1999 in Paris by representatives of eleven officially constituted national PEFC governing bodies with the support of associations representing some 15 million woodland owners in Europe and of many international forest industry and trade organizations. Since then, its membership has increased and broadened, becoming the largest forest certification umbrella organisation covering national schemes from all over the world, and delivering hundreds of millions of tonnes of certified wood to the processing industry. This Governance Review was mandated in PEFC’s October 2007 Strategic Plan and the Z/Yen Group was contracted to convene an independent Governance Review Panel to guide and contribute to the process. The Panel’s mandate includes: • • • • • • external perceptions of PEFC; PEFC effectiveness; PEFC's rules and standards; implementation and monitoring of governance; "buy-in" from PEFC's existing stakeholders; dialogue with environmental non-government organisations.

Z/Yen reviewed over thirty leading individuals in sustainable forestry, sustainability and environmental protection, international organisations, standards and certification bodies. After careful review, Z/Yen selected a Panel of seven individuals1 (four independent experts, and three from PEFC), chaired by Lord Jamie Lindsay of UKAS (United Kingdom Accreditation Service), and including Björn Andrén of Holmen Skog AB, John Dee, founder of Planet Ark, Hans Drielsma of Forestry Tasmania, Dr. Maharaj Muthoo of the Hari Environment & Development Society, Frederick O'Regan of the International Fund for Animal Welfare, and Dirk Teegelbekkers of PEFC Deutschland e.V.

1

See Appendix A for biographies of the Panel Members

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The Panel established baseline assumptions about the Review and directed Z/Yen to design an online survey2 about PEFC Governance and to deploy it as widely as possible. Z/Yen also conducted semi-structured interviews with key stakeholders, opinion formers, and technical leaders in the forestry and environmental community in order to enrich the data collection and expand buy-in to the overall process. The consultation process has been widely publicised within the relevant communities. 152 people have responded to the survey, and 26 have been interviewed or have presented contributions to the Panel’s review and Z/Yen’s analysis in this report. The Panel also drew on previous research by Z/Yen on PEFC’s Image and Impact, Location Review, and Governance Desk Study, and incorporated input from PEFC Secretariat staff during a day-long visit, observation, and interviews. In its final meeting, the Panel also heard presentations and had discussions about PEFC’s governance and environmental issues in sustainable forest management with Tim Cadman in the School of Government of the University of Tasmania3, and Saskia Ozinga of FERN. Drawing on comparative research in the field, the Panel has also incorporated a review of PEFC’s Governance against criteria established by the One World Trust, a leading institution conducting research on practical ways to make global organisations more responsive to the people they affect. This report also includes analysis of PEFC based upon the analytical methodology developed by One World Trust as the basis of its annual review4 of the governance of thirty of the world's most powerful organisations from intergovernmental, non-governmental, and corporate sectors. Key issues and challenges identified in the Governance Review fell broadly into five main categories: Governance Models, Organisational Structure and Management, Stakeholder Groups, Standards, and External Perceptions. Specific questions focused on the decision-making relationship between the Members, the Board, and the Secretariat; responsible means to continue to increase membership and certified hectarage; where inclusiveness and representation happens within PEFC’s bodies and initiatives; and how best to develop or improve public and peer understanding of PEFC’s work. Once the Panel had identified the main challenges facing the organisation, it reviewed a wide range of options for resolving each issue. In considering options, the Panel gave preference to recommendations that: • directly responded to one or more discrete elements of its mandate; • should have broad support among existing and potential stakeholders; • sit largely within the purview of PEFC itself (without significant dependencies upon external actors); • leads to enhanced credibility of the PEFC scheme;
See Appendix C for the numerical results of the survey See Appendix H for a summary of Tim’s analysis on “Evaluating Legitimacy and Quality of Forest Governance” 4 See the “Global Accountability Report 2007” at: http://www.oneworldtrust.org/
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• • •

fit logically into an incremental process of improvement; would be financially responsible, reduce costs, or contribute a new funding stream for the organisation; and contributed to addressing multiple issues at once.

Recommendations After review of options, the Panel has made the following recommendations in four general, incremental phases: • collecting the necessary resources to enable PEFC to undertake this programme of governance work - “Get Resourced”; • make necessary organisational changes necessary for efficient growth and effective governance - “Get Structured”; • implement a variety of outreach initiatives designed to reinforce PEFC’s Mission with stakeholders – “Get Engaged”; • proactively to lead policy on sustainable forest management – “Get Influential”. Phase One – Get Resourced Phase One recommendations are ‘immediate-impact’ options, identified both for their relative ease of initiation/implementation and their role as the basis for subsequent recommendations. Recommendations in this phase also include the first steps in longer-term, more complex initiatives. 1. Publish Governance Review – Transparency has been identified as a priority for PEFC, as such, an important first step would be to publish this Review prominently on the PEFC web-site, and to publicise it widely. 2. Establish International Headquarters - In line with its expanded responsibilities and capacity, rename the Secretariat the “PEFC International Headquarters”, and re-title the Secretary-General the “Director-General” of the organisation. 3. Review Board By-Laws (Executive Committee) - Review, clarify, and revise existing procedures on the Board’s Executive Committee for transparency (for example, how the Chair and Vice-Chairs are selected, what decisions are within their purview, when meetings take place, how minutes are distributed to the full Board.) 4. Update Staff Position Descriptions - Bring position descriptions of staff in line with responsibilities anticipated in the Geneva office, and develop draft position descriptions for roles likely to be needed in the next twelve months. 5. Delegate Operational Authority to Heads of Unit - Give responsibility and authority to Heads of Unit to oversee relevant recommended changes in each of their respective areas, overseen by the Director-General.
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6. Quantify PEFC ‘Impact’ - Begin to identify the impact of PEFC’s work in terms of environmental, social, economic, or political impact on sustainable forest management and non-commercial interests (for example, “Every hectare of PEFC certified deciduous forest removes X tonnes of carbon dioxide from the atmosphere every year…”) 7. Commit to the ‘High Road’ - Develop an internal policy, with guidance and draft materials/text for PEFC leadership, staff, and members that sets out an organisation-wide principle of universally constructive response to criticism; the most strident or vitriolic the attack, the more gracious and engaging the response should be, consistently across the organisation. 8. Apply the ‘Plain-English’ Principle - Create versions of the most frequently accessed PEFC resources (for example “Elements of credible forest certification schemes”) free from expert language for the non-technical reader, and highlight PEFC efforts in broader communities more prominently (namely content currently located under “Did you know?” on the web-page); 9. Promote a ‘Management-Summary’ Practice - Ensure that PEFC documents, reports, and technical documents are prefaced by a short, easy-tounderstand summary of the key points, and where applicable include a recommendation for decision-making; 10. Update Website for Accessibility - Redesign the PEFC web-site to have four distinct, dynamic, and well-supported functions: • • • First – PEFC’s customers, partners, licensed users of the logo, and consumers of PEFC certified products; Second - general information for the public, media, civil society organisations, and environmental movement; Third - technical information for forestry agencies, certification, accreditation, and standards specialists, as well as the academic/ scientific community; and Fourth - a ‘members-only’ section with discussion forums, PEFC resources, organisational updates, and opportunities for peerbased networking and information-sharing.

In addition, the web-site needs to improve the ‘Frequently Asked Questions (FAQ)’ (currently published as “Did You Know?”) and add a ‘What Do I Do If…’ section both to cover the most common issues visitors will have, but also as a resource for PEFC Members on the organisation’s position and perspective on a variety of subjects (‘High Conservation Value’ forests, contributions of certified forest to carbon mitigation, and so on).

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11. Invest in Marketing Capacity - PEFC has a dynamic and engaging story to tell, and needs the capacity to promote the organisation globally to the media, potential new members, the general public, and stakeholders; 12. Join Stakeholder Initiatives - PEFC should review options to join stakeholders’ initiatives (for example, Conservation International’s ‘Center for Environmental Leadership in Business’, or the International Union for Conservation of Nature’s ‘Commission on Environmental, Economic and Social Policy’) both to support complimentary efforts in sustainability and promote a broader understanding of PEFC’s work and contributions; 13. PEFC International Conference on Forestry and the Environment - Announce a PEFC-sponsored conference in Geneva (targeted to take place in 2009) with the express purpose of inviting participation and dialogue with Environmental NGOs. Form and support a four-person conference planning committee with two PEFC representatives, and two ENGO representatives (paid as consultants) to develop conference agenda, and negotiate broad participation. 14. Develop Annual Internal Governance ‘Check-Up’ - Include an internal review of organisational governance as part of the PEFC annual reporting process (in the same way as the financial audit) conducted by a variety of internal stakeholders in a consistent methodology to allow for measurement of progress over time. Include a review of Board capacity, procedures and goals against organisational strategy and changes in the sector. 15. Volunteer for One World Trust’s Governance Review - Invite One World Trust, a leading not-for-profit organisation focused on accountability within international organisations and corporations, to include PEFC in their annual review5 of the governance of international trans-national corporations, international NGOs, and international organisations. Phase Two – Get Structured Phase Two recommendations are a mix of ‘next-step’ suggestions for previous initiatives and organisational changes that will take some internal preparation and development. 16. Strategically Update Board Model - Develop an updated model of a Board comprised of a diverse mix of individuals with both relevant skills, and representational constituencies (e.g. forest owners, environmental NGOs, corporate leadership, labour organisations, indigenous organisations.) Also consider the utility and format of Board sub-committees (e.g. finance, fund-raising, environment, marketing, technical/expert), and opportunities for additional sub-committee membership from the

5

See: http://www.oneworldtrust.org/

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Stakeholder Forum6. As current Board members’ terms expire, ensure that replacement members match strategic goals. 17. Focus Board Role - Draft a new preface to by-laws focusing Board duties on four primary functions: management and financial oversight, networking and fundraising, promotion and outreach, and strategic planning. Operational, administrative, and technical issues should be the responsibility of the PEFC International Headquarters. 18. Recruit Additional Stakeholders into National Governing Bodies - Encourage, facilitate, and assist National Governing Bodies to identify and recruit a wide variety of local stakeholders to participate in their activities and decisions. As members of NGBs, stakeholder representatives should be able to participate substantively in PEFC International. 19. Expand ‘Extraordinary Members’ into a Forum - PEFC ‘Extraordinary Members’ should be expanded to include a broader range of stakeholders, be renamed the ‘Stakeholder Forum’7, and be granted specific rights and responsibilities in the organisation’s governance process. 20. Add Stakeholder Forum ‘Right of Agenda’ - The Stakeholder Forum should have the right (as a collective body) to add policy and other issues to the agenda of the PEFC General Assembly in its periodic meetings, and to convey to the PEFC International Headquarters Requests for Review on specific issues or questions identified by its members. 21. Expand Secretariat Capacity - The management, administrative, and technical capacity of the Secretariat should be expanded to better support PEFC members, develop an increasingly robust ‘meta-standard8’, and expand membership and partnerships. 22. Tighten Independent Consultant and Panel of Experts’ Role - Establish an augmented set of position descriptions, compressed work-flow/timetable, minimum requirements for professional eligibility, qualification test, formal review mechanism for quality of completed work, terms of reference that includes a signed ‘Statement of Independence’ for each consultant. 23. Launch Tropical Initiative - PEFC should partner with a complementary organisation of excellence (e.g. ITTO, or the Rain Forest Trust), or lead an initiative in advancing sustainable forest management in tropical forests,

See Recommendation 19, and Appendix E “The Stakeholder Forum” See ‘Appendix E – PEFC Stakeholder Forum’ for more information 8 A certification scheme applying for PEFC endorsement and mutual recognition needs to meet PEFC rules for standard setting. This is often referred to as the “PEFC meta-standard”. See http://www.pefc.org/internet/html/documentation/4_1311_400/4_1208_165/ 5_1177_288.htm
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utilising the project also to expand membership, create new alliances and promote the PEFC standard’s contributions in the developing world. 24. Add Fundraising Capacity - Recruit a dedicated fund-raiser in the PEFC International Headquarters to identify and leverage non-membership based funds, including company and other foundations, contract and grant funding in forestry from international development organisations and donors (e.g. World Bank, DFID, UNDP, EU.) 25. Increase Support to Members - The PEFC International Headquarters should survey existing members to identify and provide additional support (for example, collecting and disseminating members-only ‘best practices’, building a database of technical experts and key contacts globally, image library, draft marketing materials, procurement database, conducting training, comparative budget templates, support to increase market share, and other services.) 26. Sponsor Applied Research in Environmental Impact - Invite the Stakeholder Forum to identify and commission independent research on at least two major issues, advancing the field of sustainable forest management. 27. Create ‘Entry-Level’ Tier of Endorsement - With an aim to expanding membership globally, PEFC should create an ‘entry-level’ tier of endorsement (including separate tools and processes such as the chain-ofcustody procedure) based upon timber legality certification to allow significantly more developing countries to begin participating in the PEFC process. This level of certification should be carefully distinct from mutual recognition, and in no way ‘dilute’ or weaken the PEFC meta-standard. 28. Provide Capacity-Building Assistance - Develop the Technical Unit of PEFC with specific staff capacity to provide capacity-building services to members and prospective members, and serve as the implementation function of the PEFC Secretariat in its partnerships (contractual or otherwise) with international and development organisations. Revenues from technical assistance projects can also provide an important fundingstream for the organisation, and can serve as an additional opportunity for Stakeholders to participate in PEFC’s broader work of sustainable forest management. Phase Three – Get Engaged Phase Three recommendations are significant changes, medium-term projects, or major milestones in incremental organisational re-alignments. They will require significant preparation, and systematic engagement of internal and external stakeholders to ensure sufficient buy-in. 29. Post Position Descriptions for ‘Seconded’ Staff - Create a mechanism for and encourage PEFC Members to second appropriate staff for specific needs in
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the PEFC International Headquarters (identified in the revised organisational chart and position descriptions) for a period of no less than one year. Secondment (paying the salary of a full-time employee who works in the Headquarters) increases opportunities for leading Members to contribute to the organisation, and reduces operating budget costs while advancing new capacity and initiatives. 30. Nominate Two Board Members from Forum - The Stakeholder Forum should have the right to nominate two members of the PEFC Board of Directors through the PEFC Nominating Committee. 31. Nominate Members of the Panel of Experts from Forum - The Stakeholder Forum should have the right to nominate technical/standards advisors to the PEFC Panel of Experts. 32. Name Board Member to Co-Chair Stakeholder Forum - One of the Board members (not nominated by the Stakeholder Forum) should be named to serve as the Co-Chair of the Stakeholder Forum, working with the internal leadership set up by that body to integrate it dynamically into the organisation. 33. Revise Engagement Between Board and PEFC Headquarters - Recognising that the Board will be taking a higher-level role in the organisation’s Mission9 and delegating operational and administrative management to the PEFC International Headquarters, the Panel recommends developing a more consistent and integrated working relationship between the PEFC International Headquarters and the Board10 to ensure necessary support and oversight. 34. Review and Clarify PEFC Complaints and Appeals Procedures - Review existing decentralised Complaints and Appeals Procedures in each element of the certification process and provide a user-friendly interface on the PEFC web-site to facilitate understanding of the appropriate levels and recipients for complaints and appeals. Publish complaints submitted through the formal PEFC process and their responses on an appropriate page of the PEFC web-site. 35. Reduce Number of Board and General Assembly Meetings - Review the frequency of recurring organisational meetings (recognising that Special Sessions of the Board and other bodies may sometimes be necessary), and incrementally reduce the number of ordinary meetings as the capacity of the International Headquarters increases. Additionally, invest in highquality ‘virtual meeting’ technology, as well as dynamic technologies to enable a continuous dialogue among members. Extend the General
See Recommendation 17 – ‘Focus Board Role’ In whatever form the current Executive Committee emerges in the new Board model – see recommendation 16
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Assembly to three full days from one and a half to allow for more substantive debate on issues and effective networking and education of members. 36. Leverage Engagement with FSC - PEFC should increasingly engage with FSC in areas and endeavours of mutual benefit or concern (e.g. illegal logging), increasing communication, and where a ‘united front’ can advance the global interests of sustainable forest management (for example, inviting FSC to General Assemblies, exchange of staff at headquarters, joint development projects, mutual recognition of timber legality certification, joint chain-of-custody certification, and/or collaboration in forestry projects with international development organisations.) 37. Give Stakeholder Forum Votes in the General Assembly - Give the Stakeholder Forum votes up to 50% (rounded down) of those of PEFC Council (e.g. currently there are 35 PEFC Council members who have a total of 61 votes11, the Stakeholder Forum would have 30 votes on that basis.) Members of the Stakeholder Forum will decide internally how those votes are allocated12. Phase Four – Get Influential Phase Four recommendations are ‘capstone’ conclusions to which many other preceding initiatives lead. Implementing these recommendations should actually begin as early as possible, recognising the long lead times for collective opinion within and outside the organisation to change sufficiently to make these issues essentially self-evident by the time all others have been completed. 38. Lead Forestry Policy on Carbon - PEFC should engage relevant international organisations (e.g. the United Nations Framework Convention on Climate Change (UNFCC), or the World Bank Forest Carbon Partnership Facility (FCPF)) to offer the organisation’s technical assistance in establishing and implementing the global standard for forestry’s contribution as a carbon sink in a post-Kyoto Protocol agreement. 39. Update PEFC Brand - The PEFC brand should be reviewed for accuracy and comprehensiveness with new organisational alignment and expanded focus and stakeholder engagement. The Panel’s recommendations are incremental, mutually reinforcing and inter-dependent, and envisaged to take place ideally within two years.

PEFC Member-Schemes may have more than one vote based their certified hectarage, so that the largest members of PEFC may have up to five votes on issues. 12 See ‘Appendix E – PEFC Stakeholder Forum’ for more information
11

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Revised PEFC Organisational Bodies National Governing Bodies (NGBs) – As PEFC is a membership organisation, NGBs remain the ultimate source of authority. To accomplish their Mission, though, they have delegated certain authority to the Board of Directors and the International Headquarters to carry out and represent it internationally. General Assembly – The General Assembly is the decision-making body of the organisation, comprised of the PEFC Council and the Stakeholder Forum. Member-Schemes in the PEFC Council have between one and five votes. The Stakeholder Forum collectively will have votes equal to half the number (rounded down) of the total votes in the PEFC Council13. PEFC Council – Members of the Council represent Schemes in their country in the General Assembly. Stakeholder Forum – The Stakeholder Forum is made up of international organisations supportive of sustainable forest management, and engaged in improving and expanding PEFC work14. Board of Directors – The Board of Directors is drawn from internal and external sources as appropriate, and represents a mix of functional capacities and representation of key constituencies within PEFC. Executive Committee – The Executive Committee is made up of the Chair and Vice-Chairs (2) of the Board, who are chosen from by Board members and who work closely with the Director-General guiding the organisation. Sub-Committees – The Board of Directors convene and lead standing or ad hoc Sub-Committees (e.g. on Finance and Audit, Fundraising, or Social Issues) that support the work of International Headquarters, and serve as venues for in-depth or topical discussion among members of the General Assembly. International Headquarters – Led by the Director-General, the staff of the International Headquarters implements the work of the PEFC, and has access to the specialised knowledge of Sub-Committees in a variety of areas. Independent Consultants – Qualified Independent Consultants15 are responsible for reviewing proposed new member schemes for compliance with the PEFC meta-standard. Panel of Experts – The Panel of Experts is a pool of consultants that reinforces the work of the Independent Consultants, and upon request by the DirectorSee ‘Appendix E – The Stakeholder Forum’ for specifics on voting rights See ‘Appendix E – The Stakeholder Forum’ 15 See ‘Recommendation 22 -Tighten Independent Consultant and Panel of Experts’ Role’
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General or Board, supports the organisation by providing advice and interpretation on technical issues to the General Assembly, the International Headquarters. Revised PEFC Organisational Structure

PEFC National Governing Bodies (NGBs)

General Assembly

PEFC Council
(One to Four Votes per Member)

Stakeholder Forum
(up to 50% of PEFC Council Votes)

PEFC Board of Directors PEFC Panel of Experts
(Nominated by the Council and Stakeholder Forum) (Twelve Members, Two Nominated by Stakeholder Forum)

Sub-Committees
(Standing or Ad Hoc)

Executive Committee

PEFC Independent Consultants
(Qualified Pool of Technical Specialists)

PEFC DirectorGeneral
International Headquarters

Note: For comparative illustrations of the current and revised Organisational Structures, please see Appendix F

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Revised PEFC Assessment, Endorsement and Mutual Recognition Process

Recommended Prospective member/scheme decides to apply for mutual recognition by PEFC Independent Assessment Independent Consultant and Panel of Experts review, comment, and make recommendation on proposed scheme Capacity Building PEFC International Headquarters may work with prospective member/ scheme to improve quality

Submission PEFC International Headquarters transmits application to external review for assessment and recommendation Transmits Rejection

Amendment

Transmits

Prospective member/scheme chooses to amend scheme or appeal to PEFC Board

Appeal Timeline (Illustrative) 1. 2. Prospective member may work with PEFC International Headquarters [Ongoing as necessary until submission] Upon submission, scheme transmitted for Independent Assessment (Consultant and Panel of Experts) for comment, review, and recommendation [100 Days] Decision of Independent Assessment transmitted to Members (on approval), back to prospective member (on rejection), or Board of Directors (on appeal of Assessment’s recommendation) Decision by Board of Directors (in special session) upon appeal of rejection or findings of Assessment (if applicable) [14 Days] General Assembly decides on endorsement by Internet ballot [14 Days] Transmits Appeal of Independent Assessment

PEFC Board of Directors reviews scheme, technical assessment and decides on status

Rejection

3.

Transmits Approval (including with conditions)

Approval

4.

5.

PEFC General Assembly decides on endorsement by Internet ballot Acceptance

Rejection

Proposed Scheme receives mutual endorsement

Note: For comparative illustrations of the current and revised Assessment Process, please see Appendix G

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I. INTRODUCTION
PEFC Strategic Plan The Programme for the Endorsement of Forest Certification Schemes (PEFC) adopted their Strategic Plan16 in early October, 2007. Setting out goals in sustainable forest management, market access, economic benefit, and rural development, the Plan also called for a comprehensive review of the organisation’s governance:
3.1 PEFC recognises governance, in its broadest sense, as the key strategic determinant in achieving its overall strategic goals. PEFC will implement a restructuring of its terms of Governance, following the completion of a detailed review by external consultants.

The Z/Yen Group17 was contracted by PEFC to carry out the review in the first half of 2008. Mandate The PEFC Strategic Plan gave the mandate for the Review:
The objectives of the review and restructuring are to update the PEFC Council, its rules and standards thus making it more effective by: • Improving external perceptions of PEFC’s governance. • Making the PEFC organisation more effective. • Ensuring that PEFC’s rules and standards are simple and easy to understand; implement and operate. • Ensuring that PEFC robustly implements and continuously monitors its own requirements at all levels. • Removing obstacles to dialogue with international ENGOs.

Panel Z/Yen, in conjunction with the PEFC Board and Secretariat, drew together an International Oversight Panel18 made up of seven international experts19, three from PEFC, and four independent of the organisation (including the Chair.) Its members included: • • • •
16

Lord Jamie Lindsay of UKAS (United Kingdom Accreditation Service), Chair Björn Andrén of Holmen Skog AB John Dee, Founder of Planet Ark Hans Drielsma of Forestry Tasmania

http://www.pefc.org/internet/html/documentation/4_1311_1392/4_1208_1380/ 5_1177_1719.htm 17 For more information, see: http://www.zyen.com/ 18 See Appendix B – International Oversight Panel Terms of Reference 19 See Appendix A – International Oversight Panel Biographies

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• • •

Dr. Maharaj Muthoo of the Hari Environment & Development Society Frederick O'Regan of the International Fund for Animal Welfare, and Dirk Teegelbekkers of PEFC Deutschland e.V.

Z/Yen staff provided support and analysis. Previous Analysis Z/Yen was familiar with PEFC and its work, having conducted internal research for the organisation, including ‘Image and Impact’, ‘Location’ (of its headquarters), and a ‘Governance’ desk study. These reports contributed to the Panel’s understanding of PEFC, its work, and potential. Findings This report sets out the findings of the Panel.

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II. METHODOLOGY
This Governance Review based its analysis, recommendations on a wide variety of sources. conclusions, and

The seven-member International Oversight Panel20 was drawn from a pool of approximately thirty-five candidates from a wide variety of organisations and sectors in forestry and environment. An on-line survey was developed and widely publicised, including prominently on the PEFC website for the duration of the Review. The survey was announced on PEFC’s mailing list (to approximately 4,500 people), in Z/Yen’s periodic newsletter (to approximately 2,500 people), and in World Environment News (to approximately 20,000 people.) Participation in the survey was voluntary and anonymous, and was managed in its entirely by Z/Yen. In total, 152 people completed the survey21. This number compares favourably with the participant levels in other, similar reviews. Where appropriate, quantitative results are included in the analysis of the report, as are select quotes from the narrative sections of the survey, illustrating perceptions of individual respondents, which have been considered by the Panel. In addition, at the launch of the Review, approximately 150 leaders among PEFC’s stakeholders were directly contacted by Panel members and invited to participate in a personal interview. Approximately half-way through the Review process, an additional 52 additional people in the environmental movement were personally invited to participate as well to ensure the broadest possible representation of that stakeholder group. Of those 202 people, 26 took part in the in-depth interviews conducted by Z/Yen staff following the same format as the on-line survey. Each interview took an average of 75 minutes. Some people who were invited to offer their thoughts in the interview elected to complete the survey instead due to time or other scheduling constraints. During the four months of the Review (February – May, 2008), the Panel met three times in London to identify key issues in PEFC’s Governance, review the survey and interview data, consider a wide range of options for improvements to the internal structure and external perception of the organisation, and to make specific recommendations for this report.

20 21

See Appendix A for Panel Biographies, and Appendix B for Panel Terms of Reference See Appendix C for quantitative Survey Results

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In early April, Z/Yen staff flew to the PEFC Secretariat in Luxembourg and conducted a day-long process of interviews with all PEFC personnel, including its Secretary-General. Z/Yen identified a number of methodologies for measuring organisational governance, and selected that of the One World Trust (a leading international NGO in organisational transparency and accountability) to use as the basis for an organisational review of PEFC. During this process, the Secretary-General was requested by the Panel to complete a self-assessment of the organisation using One World Trust’s key indicators. In its final meeting, the Panel invited several presentations and discussion by representatives of the environmental movement, including Tim Cadman, a Ph.D. candidate at the School of Government in the University of Tasmania who is completing his dissertation on the evaluation of global forest governance systems22, and Saskia Ozinga, who is the co-founder of the NGO FERN, where she is currently the campaigns coordinator. Drawing from all these sources, and directed by the Panel, Z/Yen staff drafted this report of its findings, and submitted it to the PEFC Board of Directors in May, 2008.

See Appendix H for a summary of Tim’s analysis on “Evaluating Legitimacy and Quality of Forest Governance”
22

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III. ORGANISATIONAL REVIEW
Background Good governance in organisations has long been a study as well as a practice, and a number of institutions have invested a great deal of effort building a methodology for comparative research and analysis on the issue. One of the most comprehensive and prominent internationally is One World Trust:
“The One World Trust works to make global governance more accountable. With its Global Accountability Project (GAP) the One World Trust aims in particular to generate wider commitment amongst global organisations to establish and adhere to common principles and values of accountability in the relationship with the people they affect; and to strengthen the capacity of civil society to engage in global policy and decision making processes. The 2007 Global Accountability Report is the fourth major report published by the Trust as part of this project. The Global Accountability Report is an annual assessment of the capabilities of 30 of the world’s most Source: One World Trust “Global Accountability Report 2007” powerful global organisations from http://www.oneworldtrust.com/ the intergovernmental, nongovernmental, and corporate sectors to be accountable to civil society, affected communities, and the wider public. The Report uses the four dimensions of the Global Accountability Framework – transparency, participation, evaluation, and complaint and response mechanisms – as the basis of the assessment. Over time, the Report will reassess organisations to track changes in accountability and highlight progress.”

One World Trust’s methodology draws from a variety of sources in order to score an organisation: interviews and internal documentation from the organisation, secondary data on the organisation from other sources, and expert and stakeholder input. There are numerous international and external verification loops throughout the process that allow for qualitative input to the quantitative assessment. The final result is a maximum score of 100 points, with ‘High Performers’ defined as “organisations have the most consistently developed accountability policies and management systems scoring over 50 percent in at

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least three of the four dimensions.” reviewed scored as follows:

In the 2007 analysis, organisations

PEFC Review While it is impossible to replicate One World Trust’s entire process independently, publicly available materials provide insights into the criteria they use to assess each of the four categories: transparency, participation, evaluation, and complaint and response. The Panel requested the PEFC Secretariat to complete a narrative self-assessment based upon One World Trust’s methodology: Transparency One World Trust’s Global Accountability Indicator List (GAIL)23 assesses whether an organisation has a specific disclosure of information policy document outlining the commitment to respond to all information requests within a specified timeframe with the conditions for non disclosure and appeals process for the denial of information. The disclosure policy should be overseen by a trained board member or senior executive and this policy should be widely accessible to external stakeholders in several languages.

23

See: http://www.oneworldtrust.org/documents/Indicator_list_-_2008_report_-_final.pdf

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Current PEFC Performance Due to limited resources the PEFC Council decided to make all key documents, as well as the full results of its PEFC’s principal work, on the endorsement of forest certification schemes publicly available on line. This includes the full PEFC requirements, processes, results and decisions on assessments. Actions to be Considered PEFC should consider developing and adopting a disclosure and transparency document covering the disclosure of information through both the website as well as direct information requests, including a compliance monitoring mechanism. Participation GAIL assesses the engagement of both internal and external stakeholders in an organisation’s decision making. Current PEFC Performance External stakeholders: Opportunities to participate is defined within individual documents covering specific PEFC processes e.g. standards setting and the endorsement process. The documents are publicly available and invitations to participate in specific consultations are disseminated through the website and direct emailing e.g. Scheme assessments, documentation revision and governance review etc. Internal stakeholders: The role of members and extraordinary members in the decision making and control of the organisation is to large extent covered by the PEFC Council Statutes. Actions to be Considered PEFC should consider developing and adopting a participation policy document outlining the opportunities for external stakeholders to participate in PEFC processes as well as procedures ensuring meaningful participation Evaluation GAIL assesses the processes through which an organisation monitors and reviews its progress against goals and objectives, feeds learning from this into future planning, and reports on the results of the process. Current PEFC Performance PEFC reviews its progress against goals through actions and documents such as the periodic reviews of PEFC requirements for certification schemes and Governance review; strategic and annual operational implementation plans as approved by the Board; its annual reviews and reports to the General Assembly including financial reports.

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Actions to be Considered PEFC should consider developing a documented policy covering the monitoring of PEFC’s performance against strategic and annual targets as well as the monitoring of member performance on a range of requirements. The engagement of external stakeholders in these monitoring processes should also be considered. Complaints and Response GAIL assesses the channels and processes through which both external and internal stakeholders can file a complaint or an appeal. Current PEFC Performance GAIL requirements are covered in large by PEFC’s guideline on complaints and appeals procedures for external stakeholders. Actions to be Considered PEFC should consider revising its guidelines in the light of indicators in GAIL currently not addressed. These include amongst others issues of retaliation against internal stakeholders (members) and monitoring processes. Recommendations by Category The Panel has recommended that PEFC carefully review the specific requirements for formal participation in a future review by One World Trust24. To that end and in the meantime, other specific recommendations will contribute to addressing gaps in PEFC’s Governance when seen through One World Trust’s analytic methodology. Transparency One World Trust defines transparency as an “organisations’ capabilities for fostering openness in their operations, activities, and decision making processes.” Recommendations in this Review that support greater transparency in PEFC include: 1. Publish Governance Review 3. Review Board By-Laws (Executive Committee) 8. Apply the ‘Plain-English’ Principle 10. Update Website for Accessibility 14. Develop Annual Internal Governance ‘Check-Up’ 34. Review and Clarify PEFC Complaints and Appeals Procedures

24

See Recommendation 15 – ‘Volunteer for One World Trust’s Governance Review’

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Additional recommendations will improve transparency indirectly (e.g. Join Stakeholder Initiatives), increasing understanding of PEFC and its work through collaborative efforts in a variety of complementary initiatives in sustainable forest management. Participation One World Trust defines participation as “fostering equitable member control and the consistent and coherent engagement of external stakeholders in decision making and activities.” Recommendations in this Review that support greater participation in PEFC include: 13. PEFC International Conference on Forestry and the Environment 16. Strategically Update Board Model 18. Recruit Additional Stakeholders into National Governing Bodies 19. Expand ‘Extraordinary Members’ into a Forum 20. Add Stakeholder Forum ‘Right of Agenda’ 27. Create ‘Entry-Level’ Tier of Endorsement 30. Nominate Two Board Members from Forum 31. Nominate Members of Panel of Experts from Forum 36. Leverage Engagement with FSC 37. Give Stakeholder Forum Votes in the General Assembly While PEFC cannot control the breadth and vigour of engagement by potential stakeholders to its process, recommendations in this Review substantively create a clear, substantive framework for it to take place. Evaluation One World Trust defines evaluation as “fostering high quality evaluations that generate learning and strengthen accountability.” Recommendations in this Review that support more effective evaluation in PEFC include: 5. Delegate Operational Authority to Heads of Unit 6. Quantify PEFC ‘Impact’ 14. Develop Annual Internal Governance ‘Check-Up’ 17. Focus Board Role 21. Expand Secretariat Capacity 22. Tighten Independent Consultant and Panel of Experts’ Role 26. Sponsor Applied Research in Environmental Impact PEFC is still a very small organisation compared to other institutions reviewed by One World Trust (e.g. UNDP or Coca-Cola) and as such, much of its evaluatory process will be embedded in its staff and bodies (i.e. the Panel
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of Experts or the Board). Still, the One World Trust methodology sets out important additional options that the Director-General should consider. Complaint and Response One World Trust defines complaint and response as “capabilities for handling complaints from staff, partners, affected communities, and the public at large on issues of non-compliance with organisational policies (e.g. codes of ethics, environmental policies, information disclosure policies, etc.) and providing them with a response.” Recommendations in this Review that support more efficient complaint and response mechanisms in PEFC include: 5. Delegate Operational Authority to Heads of Unit 8. Apply the ‘Plain-English’ Principle 10. Update Website for Accessibility 20. Add Stakeholder Forum ‘Right of Agenda’ 22. Tighten Independent Consultant and Panel of Experts’ Role 34. Review and Clarify PEFC Complaints and Appeals Procedures PEFC’s process involves a number of independent organisations with their own internal complaints and appeals procedures. While PEFC has no control over those discrete elements, it can improve the clarity and accessibility of its own process and consider options to assist or facilitate enquiries or complaints to reach resolution through the proper channels as quickly and thoroughly as possible.

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IV. ISSUES ASSESSMENT - “WHAT COULD BE BETTER?”
Any organisation faces challenges maturing at a pace to match its growth, and systems that were sufficient at its creation and in its early years grow less and less effective as the needs of its members and its market change. Separate from the practicalities of accomplishing its Mission, every organisation must also wrestle with the perceptions of how well it is governed, organised, or carrying out its work. Frustrating as it might be at times, ‘perception is reality’ and also remains critical to an organisation’s success. As mentioned previously, PEFC has been successful at significant growth in both membership and certified hectarage. Nevertheless, there are specific challenges that the organisation faces. Governance Models Governance can be defined as “how an organisation reaches its goals without compromising its values.” More specifically, governance is often said to be made up of three main components or approaches: Formal Compliance – Direct compliance with legislation and recommended practice, e.g. UN Statement of Good Practice, OECD Principles of Corporate Governance and, in PEFC’s particular case, ASBL law and IAF principles as well. Constitutional Structure – thinking from the perspective of powers, checks and balances, and representation. For an organisation like PEFC, this should mean ensuring that the ‘constitution’ for PEFC covers the following aspects of legislative, executive and judicial powers: stakeholder inclusiveness, separation of powers, decisionmaking processes, and ethical standards. Systems Integrity – developing, maintaining and enhancing organisational system’s to help reach the organisation’s goals. For an organisation like PEFC, this should include: strategic planning, human resources management (both executive and governing bodies), transparency and disclosure, audit and accountability. All three aspects of governance are important, and must exist within an organisation in balance, with their priority shifting more toward one or the other as needs and challenges arise. In the current review of PEFC’s governance, certain ‘constitutional’ issues were particularly noteworthy: where decisions get made, how those decisions

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are implemented, who participates in the decision-making, and how clearly that process is understood inside and outside the organisation. Balance of Power (Members, Board, Secretariat)
“Separation of powers is the issue for strategy and human resources – there are not good lines of demarcation between Chairman and Secretary-General, and spillover between the two makes both sub-optimal. Not sure if it is structural or a function of the individuals in those positions. The Board should make policy and the Secretariat implement the work, prioritised and/or delegating as necessary.”

PEFC was created in order to better support, represent, and promote the interests of smallforest owners within the broader sustainable forest management (SFM) movement. The initial structure was almost completely association-based, with both the organisational legitimacy and the operational capacity vested in the members themselves, with little centralised capacity. The Board was Percentage of survey respondents answering ‘Most Preferable (1)’ constituted in a way to and ‘Preferable (2)’ to the question “Rank the four organization be both broad and types illustrated based upon your opinion of which would best flexible, as it would be advance PEFC's Mission in the future” the primary Executive body, dealing with the regular decision-making and policy. The Secretariat was an administrative body, simply supporting decisions taken by the Board, and organising regular meetings of the members. Over time, as PEFC grew in membership and certified hectarage, the very decentralised structure of the organisation has resulted in significant stress on its institutions. PEFC leadership must now consider if and how that balance of power should shift to include the Secretariat to a greater degree. ‘Bottom-Up’ versus ‘Top-Down’ PEFC, in contrast to other organisations in the field, is structured in a ‘bottomup’ fashion, with the emphasis in its Mission focused on local conditions in each member state and unique, local solutions as the most effective means of implementing its global Mission. An over-arching ‘meta-standard’ of
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minimum common requirements in forest certification, and mutual recognition of schemes provides a common framework and point of reference for members. Advantages to this approach include fostering creative solutions and maintaining ownership in the overall process and organisation by virtue of the subsidiarity principle25. Challenges include supporting members whose schemes aren’t perceived to be as robust as others, or who have limited institutional support, capacity, or budget. Inclusiveness
“The non-participation of Environmental organisations is an issue as it gives the wrong perception, the PEFC has to almost go ‘over the top’ to prove that it is as good as other schemes to achieve the same acceptance.” “PEFC is strongly dominated by conventional forestry sector, credibility would increase if its governance would incorporate different views and people with different backgrounds. Low representation of women in the governance is also a shame.”

PEFC was originally constituted to better represent the needs and perspectives of small forest owners, primarily in Europe. With the early success of the organisation, it expanded to include North American members, and most recently, a number of countries in other regions of the world.

Percentage of survey respondents to the question “Which of the following would better enhance PEFC’s reputation?”

While the organisation does now include Extraordinary Members representing a variety of other institutions and companies, the core leadership

‘Subsidiarity’ is an organisational and political term meaning that resources should be devoted to solving problems at the level closest to them.
25

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and decision-making capacity is still generally held by the original constituencies. With over 200 million hectares of certified forests represented by its members and standard, PEFC’s Mission now has sufficient global ‘weight’ and footprint to influence complementary sustainability efforts in other organisations (e.g. United Nations Food and Agriculture Programme (UNFAO), the Rainforest Alliance), and in other sectors (e.g. efforts to protect bio-diversity, or combat climate change.) Those stakeholders, though, aren’t substantively represented in PEFC governance process, preventing PEFC from benefiting from their insights and efforts, increasing chances of misunderstanding among organisations engaged in reinforcing activities, and robbing them of the impact that PEFC could have enriching and advancing their Missions as well. Transparency
“PEFC’s language and process are completely hard to understand for anyone outside the narrow circle of technical experts in forestry” “The 2007 governance report was not accessible on the PEFC website. Also documents relevant to governance (e.g. Board meeting outcomes and audits) not obvious on the website”

Technical organisations by their definition are designed to support and engage a discrete population with a deep understanding of a specific issue, and fluency in a thematic vocabulary. PEFC is no exception. As the organisation grows to include individuals with a broader range (and depth) of backgrounds in forestry, however, efforts must be made to ensure that core documents and other resources, public-information materials, background and reference papers, and day-to-day administrative work is presented in the clearest, most accessible language possible. Similarly, over time the organisation’s internal procedures and decisionmaking processes will naturally suffer from increasing ‘bureaucratic creep’. Assumptions that internal familiarity with ‘how things somehow get done’ equate to external clarity in the public, media, or other interested parties often results in charges of deliberate obfuscation. As a result, PEFC needs to make special effort first to simplify, and then to over-communicate and demonstrate its internal processes publicly and transparently.

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Organisational Structure and Management In spite of clear organisational charts, logical flow-charts, and mechanical methodologies and processes, organisations are clearly organic beasts. They grow in unpredictable directions, rarely respond in entirely predicable fashion to the best of intentions, and frequently fall victim to ‘the path of least resistance’ and comfortable habit. That it happens is not a fault; failing to respond to it and evolve however, is. PEFC’s recent Strategic Plan26 and subsequent Strategy Implementation Plan27 are important steps in that evolution. However, existing inter-relationships and inter-dependencies between the Members, Board, Secretariat, and other bodies are insufficient or misaligned to accomplish those goals effectively. This Governance Review contributes in practical terms to resolving those challenges and focuses on PEFC internal bodies, their capacities and interaction with each other specifically in light of the expectations that Members place upon them.

Percentage of survey respondents answering ‘More Of’ to the question “For each of the functions below, please tick whether you would like to see PEFC do more of, the same amount, or less of each function (and have the necessary budget to do so)”

PEFC Paper 4: Adopted at the 11th General Assembly on 05 October, 2007, Munich, Germany. 27 PEFC Paper 13: Adopted at the Board of Directors Meeting on 01 February, 2008, Luxembourg.
26

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Members’ Expectations versus Organisational Capacity
“The problem for PEFC has been the lack of resources and by that limited ability to employ manpower. Those employed have done a very good job.”

The PEFC Strategic Plan sets organisational growth targets for the next ten years (by 2017) of 45% of industrial roundwood capacity, 60% of total estimated certifiable area (512 Mha), and 50% of estimated chain-of-custody growth (32,000). Recognising long lead-times necessary for such growth, the five-year Plan identifies objectives in Market Access, Communications, Governance, and Operations necessary to reach the targets. The plan also recognises that centralised capacity must increase to implement the Strategy, with reasonable associated budget. There remains a gap between current and foreseen capacity in the organisation, in particular in change-management capacity specifically related to implementation of recommendation in this Review, overall staffing levels necessary to reach targets set by the Strategic Plan, and clear and reasonable levels of autonomous authority to implement decisions and act on policy set by the PEFC Board. Board Workload/Focus
“Currently the roles of different actors are unclear for example the board, secretariat and executive committee, making it impossible to have effective checks and balances, separation of powers and decision making processes.”

Because PEFC was created as a decentralised, association-style organisation with limited capacity in its Secretariat, the Board of Directors has played a greater role in day-to-day management and decision-making, particularly in the past two years as rapid growth and an increasing understanding of necessary changes prompted incremental steps toward new structures and procedures. With the increased clarity of the Strategic Plan, and the expectations and resources set for the Secretariat, the Board of Directors is in a position to reduce its technical, operational and administrative responsibilities and focus on a more strategic and long-term role for the organisation. In order for that evolution to happen, a new model of Board composition must be developed, and gradually integrated as operational management authority shifts to the Secretariat.

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Technical Resources Insufficient
“Working with founding members is difficult, what in the world are we going to do when we have to figure out how to include Congo or Indonesia?”

Founding members of PEFC were largely homogenous in their backgrounds and the quality of their schemes. The next ‘wave’ of members were also largely robust and mature in their institutions and management, resulting in little ‘culture shock’ as the organisation expanded. However, in the past two to three years, with the recent addition of Central and Eastern European members, as well as other countries in Asia, Africa, and Central/South America, existing technical capacity for review and strengthening of institutions and schemes has become severely strained. Looking ahead, and guided by the targets set in the PEFC Strategic Plan, it is clear that the technical needs of new members (likely in developing countries) in the next five years will rapidly overwhelm the Secretariat. Corollary institutions (e.g. Independent Consultant reviews, and the Panel of Experts) are likewise insufficient to address the demand. Complementary Initiatives/Investments
“Promotion is very important but must be done with the NGBs. A lack of or weak enforcement is a great danger to the organisation. Policy leadership creates legitimacy within the broader industry. Education should be aimed at large retail/professional purchasing organisations. Research may be better done by someone else, PEFC needs to know it, but not necessarily run it.”

With the increasing recognition of the inter-dependence of forestry with a wide variety of global companies, institutions, and initiatives, it has become clear that accomplishing PEFC’s Mission will also depend upon partnerships and alliances, international policy leadership, public and technical education, enforcement, and research and analysis. While these complementary efforts should not over-shadow or detract from PEFC’s primary purpose, the capacity to leverage the potential within them is not fully calculated into the organisation’s structure and budget. Stakeholder Groups
“How to get the stakeholder groups which do not want to participate due to entrenched attitudes to participate both at PEFC and national level - the real crux of PEFC moving forward.” “I am not sure how to best answer these questions since there must be a limit to how many groups and interests that should be directly involved with the governance, management and administration of PEFC. Yes, the organisation should have close contact and a good an open dialogue with all important stakeholders. But they should not all necessarily be actively involved in governing bodies.”

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PEFC clearly has a core group of internal stakeholders, and the organisation exists to meet their needs as well those of the broader movement for sustainable forest management. As PEFC has grown, the organisation’s impact and influence have extended into areas and issues that bring it in contact with a larger number of stakeholders outside its current membership. ‘Low-Hanging Fruit’ Has Been Harvested
“Lack of functional general standard (compare with FSC Interim) hamper the adoption of PEFC certification in countries with weak forestry organizations.”

By 2008, PEFC has already expanded to include members’ schemes that fit ‘easily’ into the over-arching meta-standard. And while at the moment PEFC is the largest forestry certification organisation in the world, there is a growing recognition that certification has reached a ‘plateau’, and the next level of potential will only be reached by dramatic innovation. PEFC must consider the ‘next generation’ of prospective members as stakeholders as well, and analyse their needs, capacity, and challenges in the context of advancing sustainable forest management in their territories. Lack of Diverse Stakeholder Representation
“PEFC is very inclusive for the stakeholders that want to be included. The difficult part is the relationship with the environmental organisations that do not want to be included and support PEFC because they prefer a competitive system under their own control. The problem is the power struggle between the PEFC stakeholders and the environmental organisations.”

The second group of stakeholders critical to PEFC’s long-term success are not forestry agencies and schemes at all. They are a diverse, heterogenous, nontechnical, boisterous, and demanding constellation of environmental not-forprofits (or non-governmental organisations (ENGOs)), worker and trade associations, large-scale timber-product retailers, and representations of consumers, and indigenous peoples. There has been significant debate over this broader palette of stakeholders and their actual importance and practical impact on PEFC’s global Mission. It is clear however that they play two critical roles: first, that they provide global credibility, acceptability, and accountability, and second, they have the capacity and have evidenced the will to frustrate PEFC’s work. PEFC has moved beyond its initial base and made some effort to engage these stakeholders at the national level by inviting/including them in National Governing Bodies as they review, develop, and implement schemes. Similarly, at the international level, PEFC has a body for Extraordinary Members that includes some representatives of international stakeholders.

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Percentage of survey respondents answering ‘Insufficient’ to the question “For the following stakeholder groups, indicate whether their level of involvement with PEFC at the moment is insufficient/sufficient/excessive” (minimum of 25%)

However, in the context of PEFC’s strategic objectives and the broader contributions that PEFC could make internationally, stakeholders must be integrated more formally into the organisation’s governance. Levels of Integration and Influence
“Processes are in place to be inclusive with interested parties/stake-holders, but little guidance on how to proactively engage under-represented participation”

While both sets of stakeholders – potential new members from developing countries, and a diverse range of organisations invested in PEFC’s market – are arguably critical to the organisation’s success, it must realistically decide on levels of integration and influence. It is also important to note that collaboration is not a unilateral process – stakeholders must also be willing to engage constructively, to listen, understand and appreciate fundamental values and aims of PEFC, and also be willing to compromise in an effort to reach greater, common goals. PEFC, however, must create an internal environment that makes substantive engagement with stakeholders possible, and set an example externally working directly to support stakeholders’ complementary interests, and in the broader international market and community.

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Standards
“Strength - enables consistency at the broad level and flexibility at the local level. Weakness is that perceptions about the lowest common denominator may tarnish the meta-standard.” “Strength – flexibility, a myriad of species, ecosystems, political and economic cultures. Should enable us to spread wide - where a more rigid approach will fail. But - inconsistencies or perceived inconsistencies - this is a weakness when engaged in political tussle. Not actually weak system, but the credibility is challengeable. Strength outweighs the weakness.”

PEFC is an organisation that endorses forestry schemes, and maintains its own international meta-standard of sustainable forest management. As such, it must balance its decentralised nature (deriving its legitimacy from its members) with an increasing demand for a more robust, centralised, and independent organisation and staff capacity. That balance will contribute to the responsible growth of PEFC and its standards. Variance in Robustness of PEFC Member Standards
“Low minimum standards at the PEFC international level give broad space to move in, but leads to big differences in the quality of national schemes” “Over time the real standards agenda should be harmonisation and convergence. Non-aligned bodies (e.g. FSC) will have the opportunity to criticise the 'lowestcommon denominator' approach at the national level”

PEFC’s greatest strength – the commonality of the meta-standard that retains the flexibility of local schemes – is also arguably its greatest weakness as well. National and international standards are merely empty frameworks, and rely upon a wide variety of other factors to make them ‘live’. National schemes and the institutions that develop and enforce them must also have skilled personnel, access to expert consultants, regular education and training, opportunities for peer review, support of national governments, industry, and the general public, and sufficient budgetary support. That distinction is both a caution and a mandate for PEFC: the full organisation will remain vulnerable to the criticism and obstruction that can be levelled against the weakest combination of individual national scheme, and the institution responsible for implementing it, irrespective of the strength of the overall Mission, or other truly robust schemes and institutions.

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‘Meta-Standard’ Could Also Be More Robust
“Administrative and standards compliance (in view of the scheme endorsement) has been improving during the past year. Still the rules and the decisions are not fully consistent and fair to all parties. Some rules are applied strictly, whereas some problem areas are not tackled proactively at all and any performance will go through. Improvements on in this respect have taken place.” “Main weakness is no requirement not to convert forests into plantations. Also, no specific (stringent) requirements for natural forests, which are vital for climate and biodiversity. Right of indigenous people not protected. Chain of custody not strict enough to eliminate potential illegal wood from countries at risk. Also, field audit should be compulsory before the certificate is issued.”

The PEFC ‘meta-standard’ represents the minimum standard which all endorsed national schemes must meet within their jurisdiction. While member schemes may not fall below these levels, they are encouraged to integrate and exceed them if possible.

Percentage of survey respondents answering the question “Which of the following would better enhance PEFC’s effectiveness?”

Like any standard, it must be updated over time as new challenges and opportunities arise, and with the addition of new stakeholders to the process, additional criteria are included to strengthen its holistic value. The intergovernmental nature of this process has given it the current credibility; a broader base including more international stakeholders will add yet more to its credibility in the future. ‘Northern-Hemisphere’ Standard Barrier to New Members
“You will always have a defined minimum standard, however this may preclude some members who struggle to meet the minimum but could still benefit from membership”

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From its inception, PEFC’s membership was primarily European countries with generally advanced sustainable forest management schemes and wellresourced institutions advancing their Missions. The addition of North American schemes reinforced this standard. However, the current comprehensiveness of that standard is a de facto barrier to many potential new members who do not possess the budgetary and personnel support, or institutional effectiveness to develop national forest certification schemes, and who may be additionally challenged by widespread poverty, endemic corruption, and civil or ethnic conflict. As such, PEFC needs to somehow ‘bridge the gap’ between new members’ capacity and the PEFC meta-standard, especially if it continues to become more and more holistic and robust. Panel of Experts Insufficiently Robust, Clear
“I had hoped that the panel of experts was a way of simplifying the system. Now it seems to be yet another layer of administration and bureaucracy. I understand the good intentions, but this tends to be too much.”

While the Panel of Experts has been cited as improving the PEFC process and adding additional legitimacy to the PEFC meta-standard, it remains a relatively new body in the organisation and is not yet sufficiently fleshed-out or integrated into its governance. The Panel of Experts, and their added value, is unevenly appreciated within PEFC, and often unclear in external perceptions. While it is clearly an important part of the internal checks and balances, its membership, mandate, process, role, and transparency should be reviewed along with other bodies and integrated more solidly into the restructured organisation. External Perceptions
“Perception is reality.”

While PEFC was a smaller organisation, and functioned primarily to support its original, core constituencies, it could afford to remain primarily inwardfocused. With its successful growth and global prominence, it must now also consider its image and impact from the perspective of a wide-variety of other external audiences. Poor Global Awareness of PEFC
“Still waiting for somebody to ask me for PEFC logs.” “PEFC should do much more about promotion or marketing. PEFC is a brand which known only to forest owners and sometimes to processors further down the chain. NOT known to the end consumer.”

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In spite of the organisation’s size, membership, and certified hectarage, PEFC is not a globally recognised ‘brand’ compared to Fairtrade, the Rainforest Alliance, or even FSC. The PEFC logo is valuable and important in the overall process, but not ‘in demand’ at the consumer level. Part of this is simply because such consumer awareness has not been a priority for the organisation, focusing deliberately on timber-product source certification and chain-of-custody. It also is a challenging, expensive (and elusive) goal, with popular opinions mercurial and hard to influence consistently and globally. While PEFC has strong, well-informed support in some quarters (e.g. smallforest owners, commercial timber-product wholesalers), its reputation among other groups is less favourable, or (almost as dangerous) unknown or misunderstood. “PEFC is Industry-Driven”
“It is a concern that there is a perception outside of PEFC that it is an industry body. It needs to show that all stakeholders are involved.” “PEFC is seen as an industry scheme designed to allow business as usual. To gain credibility it needs to involve its critics and win them over. This process would also ensure that any weaknesses in the system would be exposed and righted.”

One of the most common misconceptions of PEFC is that it is almost solely industry-driven, which is understood to mean representing primarily commercial interests, aimed at maximising profits at the expense of sustainability, and aggressive toward the environmental movement, labour organisations, and the interests of indigenous peoples. Unfortunately, given the organisation’s origins and current membership, this misperception will be slow to change. However, the relatively ‘blank slate’ of impressions within a large portion of the international community invites efforts by PEFC to proactively communicate its message effectively and allow those communities to further develop a broad, accurate and positive awareness. ‘First Impressions’ are Opaque
“It would help if PEFC was able to demonstrate this more transparently through its website - for those not directly involved it is hard to gauge.” “How do you think that it would be possible to know anything about these issues, if one is not constantly working within PEFC organisations?”

Outside the PEFC ‘family’, popular understanding of certification and international standards is sketchy at the very best, and comprehension of the

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complexities of sustainable forestry management even more rare. Members of the public, the media, environmental, social and other NGOs base their first impression of PEFC on what they hear from other people, and a quick glance at the website. Unfortunately, the most common result of that combination is a muffled confusion akin to the feeling one gets reviewing the instructions to an unfamiliar piece of electronic equipment or office software – vague confidence that it probably works, but little idea what the most important things to know are for a normal person, and confusion about where best to even start figuring it out. As PEFC’s work and influence have grown – in some ways far beyond its original constituency – a far larger global population seek the organisation out to understand its Mission, process, and impact. The sources to which they look must be free from technical jargon, easily understandable, accessible, exciting, engaging, and a catalyst for them to communicate that message to other people accurately. Other Issues The survey and interview process for this Governance Review was semistructured and designed in a way to respond to the Panel’s mandate, but also encourage other feedback that participants felt was similarly important but not covered in the framework questions. Much of the open-ended or “Other” feedback reinforced comments and findings in other issues, but several significant themes bear noting independently. Organisational Conflict – FSC, ENGOs
“PEFC personnel have been kicked over and over by FSC and environmentalists – it’s no wonder that they’re defensive” “Somehow, the organisation has to learn to take the high road with its worst critics, ‘killing them with kindness’ (especially when they don’t deserve it!)”

It is no secret that PEFC was formed to represent communities that did not feel sufficiently supported by FSC, and that the two schemes have since then been in varying degrees of conflict and competition. PEFC has also been the subject of vary degrees of criticism from a variety of environmental NGOs over endorsed schemes, perceived lack of stakeholder diversity, and other issues. Much effort has been made to reach out to both groups constructively, both proactively and in response to specific incidents, but a strong sense of

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organisational pain and defensiveness still remains, and clearly colours discussions about FSC and ENGOs, as well as organisational reactions publicly to them. ‘Flash-point’ Issues ENGOs’ criticisms made to this Review have coalesced around a number of issues they identify as failings internal to the PEFC process, namely logging in old-growth (and high conservation-value) forests, and response to alleged breaches at the national level within PEFC endorsed schemes28. While this Review does not have the resources to research fully the circumstances and considerations of these or other specific local or national issues, it does bear noting that ENGOs complaints about these subjects are sufficiently broad-based and contentious to create a barrier to their current or future participation in PEFC. ‘Next Generation’ Challenges PEFC is now a global organisation playing at the international level with influence (and hence, responsibility) significantly exceeding its initial Mission. As such, it needs to recalibrate its work to include responses to ‘next generation’ challenges such as sustainable forestry’s role in climate change, and international development. PEFC also needs to expand its role on forest issues, including the use of chemicals or poisons, genetically modified organisms, threats to tropical and old-growth forests, biodiversity, and monoculture planting practices, among others. The sustainable forestry sector is constantly evolving, changing at a pace that PEFC must somehow match and when it can, advance the sector constructively. In the next five years (covered by its strategic plan), that will mean tactically building capacity to craft good policy on complex and nonlinear problems, and the persuasive skills to argue their implementation.

See also “Next Generation Challenges” in the following paragraphs for other areas of note identified as priorities for PEFC’s governance process to review and address.
28

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V. OPTIONS - “WHAT COULD WE DO ABOUT IT?”
The Governance Panel considered a wide range of options as it reviewed issues and challenges facing PEFC. Some were clearly not viable, but still helped to focus critical analysis and creativity on innovative and interdependent solutions better suited to the issue in question. All are included for transparency, and in the event that those not currently recommended might provide some tangential value, or options at a later date. Quantitative results from the survey, and qualitative responses in the interviews contributed significantly to the Panel’s consideration as well, and are noted specifically in each of the following sections: • Improving external perceptions of PEFC’s governance. • Making the PEFC organisation more effective. • Ensuring that PEFC’s rules and standards are simple and easy to understand; implement and operate. • Ensuring that PEFC robustly implements and continuously monitors its own requirements at all levels. • Removing obstacles to dialogue with international ENGOs. External Perceptions of PEFC PEFC has identified its public and industry reputation as being a priority for improvement as part of this Governance Review. Perceptions of PEFC fall into six broad categories: first, positive (which should be reinforced); second, neutral and informed (an issue of marketing); third, neutral and uninformed (an issue of education); fourth, critical and informed (an issue of engagement); fifth, critical and uninformed (an issue of education again); and sixth, unaware (an issue of introductions.) Focus On - Transparency and Public Information
“PEFC currently not marketed as visibly as FSC and has not been taken up by the retailers as such. PEFC needs to ensure that everyone fully understands the impact of the work it is doing and the lives that are improved through their work.”

PEFC could continue functioning in much the same way, but dramatically increase its communication efforts, recognising that a significant amount of neutral, negative, or no perception of PEFC is merely a matter of the organisation’s technical nature and low public profile. Simply putting the work and process of PEFC in accessible terminology would go a long way to increasing an understanding of the organisation. Communicating the positive impact of certified sustainable forests on the

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environment, ecosystems, public and social health, poverty and agriculture would influence other audiences. Focus On – Changing Critics from Within
“We get upset that ENGOs aren’t begging to work with us – perhaps we need to go work with them on their projects and set a good example”

PEFC cannot solely rely upon its audiences to make the effort to understand and appreciate the organisation’s wider contributions, and could also take the message to communities that it would like to influence. Proactively joining stakeholders’ initiatives, contributing to thought leadership within the industry, conducting direct education in target communities, or developing and contributing materials to formal educational programmes in forestry and environmental science would gradually change perceptions of PEFC. Focus On – Inclusion to Transform the Organisation
“In general I would say that the national level should have a broader representation than the international level. The national representation will however depend on the local conditions. On the international level the representation will depend upon it here is a real international representation possible from the relevant stakeholder groups when PEFC and forest based certification is concerned.”

PEFC can also ‘bring its critics into the fold’, and seek to change negative opinions by changing itself to some degree and making stakeholders part of the solution by giving them an investment in the organisation and its success. This can be done in stages, gradually opening PEFC up to engagement by groups who are affected by its work, while retaining control over key processes and decisions during a period of mutual confidence-building and negotiation of roles, rights, and responsibilities. Options - External Perceptions of PEFC Specific Themes considered by the Panel include: Keep It Simple
Advantages Disadvantages PEFC could create a new ‘front-end’ image on it’s web-site, materials, and public relations, specifically aimed at the nontechnical audience, media, and other international organisations - ‘Opens’ the organisation to the widest possible audience; reinforces plain speech and a focus on tangible impact of PEFC’s work; encourages links to PEFC’s site and work from other organisations - None directly; will need a clear path for existing PEFC technical materials so current users are not inconvenienced or confused Outcome Recommended

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For example, see recommendations:

4. Quantify PEFC 'Impact' 6. Apply the 'Plain-English' Principle 9. Update Website for Accessibility

Push the Logo

Advantages Disadvantages

PEFC could aim for broad global brand recognition through investment in its logo with partners, new alliances aimed at marketing the PEFC brand, and large-scale advertising campaigns - Broad public recognition could multiply influence in policy-making, membership development, and fund-raising; would contribute to combating illegal logging - Very expensive; would require negotiated agreements with multiple partners; difficult to guarantee broad public understanding of the brand; runs risk of ENGO campaign against the PEFC logo Outcome Not Currently Recommended

Lead by Example
Advantages Disadvantages

PEFC could also let its actions ‘market’ itself, both internally by making the organisation more transparent, but also by reaching out to stakeholders and tactically supporting their efforts

- ‘Opens’ the organisation to the widest possible audience; reinforces plain speech and a focus on tangible impact of PEFC’s work; encourages links to PEFC’s site and work from other organisations - Will require additional personnel and budgetary resources; PEFC must be willing to compromise at times when working with other organisations Outcome For example, see recommendations: Recommended

1. Publish Governance Review 11. Join Stakeholder Initiatives 17. Expand 'Extraordinary Members' into Forum

PEFC Effectiveness Effectiveness is success in producing a desired effect or result; in PEFC’s case, ‘to give society confidence that people manage forests sustainably.’ PEFC can focus on a number of different levels when improving processes, management, and quality control, utilising improved systems (how things get done) and standards (how well they get done.) Focus On – Standards and Enforcement
“Wood, timber and forest products are in an international trade. The raw materials and the products floats independent of national borders makes it absolutely necessary to have some harmonisation. But on the other hand the nature is not identical. The strength of today’s system is to unify these crossing interests and balance them. The weakness is the difficulty to create the right balance and that the system tends to be complicated.”

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As a member-based and technical organisation, PEFC could invest significantly in both national and international (meta-) standards, as well as develop mechanisms for monitoring and enforcement; essentially becoming the undisputed gold-standards of forestry. This would be a case of ‘focusing inward’ and refining PEFC’s core purpose, and investing resources primarily in the organisation’s technical capacity, and its members’ ability to meet and advance the standard. Focus On – Operations and Administration
“PEFC needs more ‘hands on deck’ to do the work and support the existing fulltime staff”

Fortunately, PEFC is an organisation fallen victim to its own success, and a number of current and perceived problems with effectiveness could be remedied with a more robust Secretariat and investment in its operations and administration. The mutual-recognition process, Board of Directors, and membership requirements would remain the same, but be better supported with a broader range of initiatives, staff and resources. Focus On – Members and Board
“Top leadership of PEFC should include representation of international well known opinion leaders, policy makers or authors”

Another approach would be to focus on the ‘high-level’ governance and invest significantly in membership and the Board of Directors, aiming to gain the greatest possible market-share of certified forest globally, and recruit the most influential individuals in the forestry industry, environmental movement, and international policy arena. Essentially, this approach emphasises scale, volume, and political sway to accomplish the organisation’s goals, lead alliances when they are advantageous, and define policy nationally and internationally. Options - PEFC Effectiveness Specific Themes considered by the Panel include: Adopt a Federal PEFC could centralise its decision-making process through permanent representation of members and stakeholders in its Structure
Advantages

International Headquarters, and rely upon Members to implement decisions in their own jurisdictions - Very clear and powerful decision-making process; creates much more unified organisation to interact with potential partners, funders, and

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Disadvantages

competitors; reduces variability in implementation quality - Counter to original purpose of PEFC; very resource and budget intensive; potentially lose the innovation and applicability of the subsidiarity principle Outcome Not Currently Recommended

Restructure Board of Directors
Advantages Disadvantages

PEFC could reform its Board of Directors to focus it on highlevel strategy and advancement, opening it to a broader range of personnel, skills and representatives from various stakeholders - Leverages the comparative advantage of Board-level personnel; increases internal and external buy-in and confidence; matches Board form to revised function detailed in PEFC Strategic Plan - Delay in impact of this option as restructuring will only happen as current Board members’ terms expire and are replaced Outcome Recommended

For example, see recommendations:

14. Strategically Update Board Model 15. Focus Board Role 35. Streamline Board, General Assembly Meetings

Build Secretariat PEFC could augment its Secretariat with additional staff, focusing on technical assistance to members and potential Capacity
members, marketing, fund-raising, outreach and partnerships Advantages Disadvantages - Would expand the reach of the organisation; increase quality of support to members and prospective members; improve public relations and partnerships/alliances - Will require additional funding Outcome For example, see recommendations: Recommended

3. Delegate Operational Authority to Heads of Unit 20. Tighten Independent Consultant, Panel of Experts' Role 26.Provide Capacity-Building Assistance

PEFC's Rules and Standards PEFC is an organisation that endorses standards, and as such, its primary purpose will be to improve, advance, and expand the acceptance of PEFC endorsed standards as widely as possible in forestry, whether in industry and commercial, policy and international, scientific and academic, or non-profit and social sectors.

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Focus On – National Standards and Quality
“Technical assistance is very, very important; there are problems in interpretation of PEFC rules/regulations/practices at the local level. More over it must be taken into account that in each country there local laws/regulations. The compromise shall be found in a lot of issues.”

To that end, PEFC could focus more on the national standards of its members, helping them through a peer-review process with significant technical assistance from an augmented Secretariat. PEFC was established as a member-based organisation, and with the recent addition of new members, as well as the anticipation of new members in developing countries who have less rigorous schemes and institutions (or none at all), services to members assisting them to meet, maintain, and advance beyond the PEFC meta-standard will be increasingly necessary. Focus On – PEFC Meta-standard and Quality
“Strengths of the meta-standard - one common set of rules and regulations; the same requirements to all the organisations; the standard reflects the best practice; easy to use and to compare. Weaknesses - the same requirements cannot be used for different countries; lacks procedures of defining of compromise in case of conflicts between the "meta-standard" and the local legislation must be envisaged”

Alternatively, PEFC could continue to focus on the international metastandard that all members must meet, clarifying existing elements, improving technical and environmental criteria, and expanding the organisation’s capacity to train experts to assess national schemes. PEFC could also seek to expand the recognition of its meta-standard globally (e.g. becoming the “Fairtrade” of sustainability), and engage with national and international leaders to push for broader use of it in as the basis of development and environmental policy in forestry. Focus On – Additional or Parallel Criteria
“Big gap in PEFC is a governance that guarantees some degree of power to environmental groups, and thus can attract them”

Another option would be to augment the PEFC meta-standard incorporating recommendations and interests of key PEFC stakeholders, for example including additional criteria on environmental impact, biodiversity, and sustainability, or labour and social/indigenous standards. While it would increase the difficulty of meeting or renewing membership criteria, it would enrich PEFC’s reputation with key stakeholders and the public, and expand the organisation’s influence.

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Options – Rules and Standards Specific Themes considered by the Panel include: Increase Richness of Meta-Standard
Advantages Disadvantages PEFC could improve the comprehensiveness of the metastandard by including a broad range of international stakeholders in its on-going development process - Adds both applicable content and legitimacy from complementary stakeholders’ perspectives; increases field accountability as well through global stakeholder engagement - Opening discussion on the meta-standard to broader audience will necessarily complicate process/negotiation as well; technical resources to review new schemes will have to be augmented proportionally Outcome For example, see recommendations: Recommended

11. Join Stakeholder Initiatives 16. Recruit Stakeholders into National Governing Bodies 17. Expand 'Extraordinary Members' into Forum

Assist Members to Meet Standard
Advantages Disadvantages

PEFC could build the capacity to provide technical assistance to members and prospective members to assist in meeting requirements of the meta-standard for endorsement

- Increases the quality of proposed schemes before review; increases institutional strength of forestry agencies in developing countries, supports broader policy aims in sustainable forest management - Must increase ‘firewall’ between technical assistance to a prospective member and expert review of the Scheme; will raise PEFC’s profile internationally making it more susceptible to critical review/risk Outcome For example, see recommendations: Recommended

19. Expand Secretariat Capacity 20. Tighten Independent Consultant, Panel of Experts' Role 25. Create 'Entry-Level' Membership Tier

Adopt Common PEFC could incrementally seek to create a common national National Standard standard among members
Advantages Disadvantages - Creates a more robust common level of forest management; removes criticism of Scheme variability; increases cohesiveness and influence of PEFC - Eliminates flexibility to meet unique local needs/conditions; very difficult to agree on practical common standard; challenges fundamental purpose of PEFC Outcome Not Currently Recommended

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Implementation and Monitoring of Governance Governance is the means by which an organisation achieves its goals without compromising its values, and should be a self-improving process, not a selfperpetuating one, and must be built into any organisation at multiple levels, in both formal and informal ways. Focus On – Centralising Decision-Making Power
“Associations tend to display a wide range of quality and consistency among the members and their commitments to the organisation, leading to a more cumbersome organisational structure. Over time, a growing body of knowledge and de facto authority has developed in the PEFC Secretariat, though. The challenge is in balancing that so that no ones vested interest is being undermined, yet there's a functional capacity, not necessarily by fewer decision-making bodies, but perhaps authority coupled with more frequent dialogue with the Secretariat enabling a nimble role.”

PEFC has always been a highly-decentralised organisation, with the decisionmaking authority vested primarily in its members. As such, the organisation’s reach is limited, and governance is informal and often personality- and issue-driven. Centralising additional decision-making power within PEFC and formalising governance procedures would both invest the organisation with additional checks and balances, increased transparency, and greater public legitimacy. Focus On – Open Membership to All Stakeholders
“After the very successful growth of PEFC in the last 5 years, it might be a good time to try to involve new/more groups in PEFC certification (e.g. through Extraordinary membership and increased activities for/with Extraordinary Members)”

Governance mechanisms can also include broader participation by groups with diverse interests, each of which contributing to keeping a balance of power within the organisation. PEFC could open its membership to additional stakeholders beyond the scope of ‘Extraordinary Members’ and engage them in the standard-setting and decision-making process, increasing the organisation’s reach, as well as its broader legitimacy. Focus On – Trouble-shooting: Engage and Broker
“Enforcement - seeing the PEFC out at national level and working with stakeholders at national level to address any perceived grievances of implementation of the objectives of the PEFC.”

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“Complaints and appeals procedures are often very weak (people don't know who to complain to and how)”

PEFC could aim for the role of ‘honest broker’, and actively seek out a broad range of stakeholders in sustainable forest management to identify issues and concerns about good governance, and work to broker agreements with them addressing the issues. By inviting criticism, PEFC both creates an opportunity to clear the air of persistent conflict, but also negotiate partnerships that could significantly advance its mission. Options – Implementation and Monitoring of Governance Specific Themes considered by the Panel include: Establish PEFC Ombudsperson
Advantages Disadvantages PEFC could create an independent Ombudsperson reporting only to the General Assembly who is empowered to receive, investigate and propose redress to infringement of the PEFC process - Would create a point-of-contact for any criticisms of national or international violation of standards; increases accountability and transparency; embodies commitment to multi-stakeholder process - PEFC does not have mandate or capacity to address national challenges; very difficult to support necessary field-work/assessment of claims, large administrative support/budget necessary, too much power being vested in one place Outcome Not Currently Recommended

Increase Transparency, Simplify PEFC Process
Advantages

PEFC could both make its work more transparent to external audiences, and create substantive opportunities for critics to become engaged stakeholders and invest in the process - Add value in multiple areas (public relations, membership, accountability, fund-raising); improve public awareness and opinion of PEFC; increase PEFC’s ‘weight’ in the international community of policy-makers - Danger of unduly simplifying a necessarily complex issue and process; addition of additional stakeholders must not paralyse organisation Outcome Recommended

Disadvantages

For example, see recommendations:

9. Update Website for Accessibility 28. Nominate Two Board Members from Forum 29. Nominate Member of Panel of Experts from Forum

Initiate Governance PEFC could set up both internal and external reviews of its governance to take place on a regular basis, with results Mechanisms
published in its annual report and publicly available on its web-site

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Advantages Disadvantages

- Increase transparency, quality and accountability; improve public perception, reduce criticism; identify new opportunities for growth - Risks putting too much emphasis on ‘polishing’ the process; multiple measures for ‘good governance’ will conflict on priorities Outcome For example, see recommendations: Recommended

7. Volunteer for One World Trust's Governance Review 13. Develop Annual Governance 'Check-Up' 18. Add Stakeholder Forum 'Right of Agenda'

“Buy-in" from PEFC's Existing Stakeholders
“Any change in governance structure should strongly focus on keeping current supporters ‘on board’”

No organisational change process can succeed without the active understanding and endorsement of its existing staff and stakeholders. While part of this Governance Review is focused on what the organisation could become to new members and external communities, it must first seek to provide value and efficiency to PEFC’s current members and constituencies. Focus On – Increase Support and Value to Members
“Compared to the good communication channels between the PEFC Council and each NGB, there seems to be little horizontal communication among NGBs for sharing knowledge, information know-how and experiences for promotion of PEFC in the markets.”

Members join an association for two reasons: to advance an agenda together more effectively than they are capable of advancing it alone, and to benefit from collective resources available only at scale. Growth and change in that association must increase the return on one or both of those investments. PEFC could increase support and value to members by collecting and disseminating ‘best practices’, building a database of technical experts and key contacts globally, hosting an image library, drafting marketing materials, creating a procurement database, conducting training, providing comparative budget templates, offering support to increase market share, and other services. Focus On – Expand Market Share
“To serve its purpose, PEFC should remain an industry based system” “If the goal is market access, and the market is represented by the community of stakeholders, their engagement makes PEFC more effective”

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One of the original purposes for PEFC was to represent the interests of small forest owners, both protecting sustainability and helping to create a market for certified forest products. PEFC could invest in both the chain-of-custody certification programme, as well as marketing capacity to promote PEFC forest products internationally with large-scale timber retailers, pulp and paper industries, and finishedgoods manufacturers. Focus On – Simplify, Clarify, and Improve Efficiency
“Very complex governance structure – ‘a lot of moving parts’ - that could be very burdensome for the organisation. Streamlining would be useful, could be dragged down by too many players who don't understand the details.”

PEFC is a technical organisation, and since its creation has accumulated a significant volume of processes, rules, and guidelines. Every organisation needs a thorough ‘house-cleaning’ on a regular basis, with standard procedures reviewed for applicability, efficiency, and clarity. PEFC could conduct an administrative audit, surveying members about the ‘ease-of-use’ and effectiveness of most commonly used processes, simplifying or eliminating redundancy as necessary. Options – ‘Buy-In’ from Existing Stakeholders Specific Themes considered by the Panel include: More ‘Value for PEFC could increase support to members as part of its reorganisation, providing additional resources, technical the Money’
assistance, training and other services Advantages Disadvantages - Richer communication with and between members; increases confidence and morale; more appealing to prospective members - Limited resources will require difficult decisions of budgetary priorities; funds could be used for identified ‘external’ priorities Outcome For example, see recommendations: Recommended

19. Expand Secretariat Capacity 23. Increase Support to Members 27. Post Position Descriptions for 'Seconded' Staff

Limit Stakeholder/ PEFC could focus on its core constituency – forest owners – External Influence and increase communication with other stakeholders, without
Advantages Disadvantages

necessarily giving them additional direct influence in the organisation - Keeps organisation focused on founding principles and objectives; invests resources in quantifiable and familiar projects and process - Increases risk of (potentially debilitating) political/social criticism; cuts off access to resources, credibility, and innovation in other communities

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Outcome

Not Currently Recommended

Focus on New PEFC could invest heavily in expanding membership and endorsed schemes, creating a progressive certification and Members
setting significant targets for global hectarage Advantages Disadvantages - Keeps organisation focused on fundamental purpose; leverages comparative advantage; seizes market opportunity of developing countries and forests - Ventures into difficult and largely unfamiliar territory (conflict zones, corrupt governments/institutions); risk of imbalance between quantity and quality Outcome For example, see recommendations: Recommended

19. Expand Secretariat Capacity 25. Create 'Entry-Level' Membership Tier 26.Provide Capacity-Building Assistance

Dialogue with Environmental Non-Government Organisations (ENGOs) ENGOs have significant potential to multiply or diminish PEFC’s impact. They are highly networked, intensely driven, and often have the active support of thousands of people who can be leveraged directly on issues, or to make or change national or international policy. They also can lend credibility, acceptability, and accountability to PEFC’s work, and cannot be ignored now that PEFC has grown to be the largest forestry certification scheme in the world. Focus On – Marketing Push
“Education - PEFC currently not marketed as visibly as FSC & has not been taken up by the retailers as such. PEFC needs to ensure that everyone fully understands the impact of the work it is doing and the lives that are improved through their work.”

Part (though not all) of PEFC’s ‘trouble’ with ENGOs is a product of miscommunication, misunderstanding, and mistrust. While not addressing political and technical differences, PEFC could design and implement a marketing strategy designed to re-present the organisation, correct misinformation and lay the foundation for new or renewed dialogue. Focus On – Identify and Partner with One Key ENGO Alternatively, PEFC could identify one global ENGO and negotiate a full partnership with them, granting some rights in the PEFC standards and

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decision-making process in exchange for collaboration on certification and representation in the broader environmental movement. Working with a dedicated ENGO (as opposed to being forced to maintain dynamic relationships with multiple ones) would allow PEFC to focus limited resources and build a deeper, more substantive relationship. Focus On – Open Membership to ENGOs
“It is clear to improve acceptance of PEFC above a certain threshold it must involve Environmental groups - equally the Environmental groups cannot continue to ignore PEFC.”

PEFC could give ENGOs the right to take a formal role in PEFC as Associate Members with some voting rights (a proportional system of collective votes, for example.) There is a clear value to bringing them ‘into the family’, both from a substantive standpoint, as well as from a marketing view. Options – Dialogue with ENGOs Specific Themes considered by the Panel include: Grant Rights and PEFC could create space, incentives and responsibilities for ENGOs within the organisation and its processes, inviting Responsibilities
Advantages

Disadvantages

criticism but only when it is paired with suggested upgrades and engagement - Recognises that PEFC is imperfect but improving; increases transparency, holistic quality, and resources; creates opportunity for PEFC to ‘tilt the playing field’ of international forestry policy in its favour - Will complicate and slow PEFC process to incorporate broader input and engagement; will be a challenge to new members who are also targets of ENGO criticism for other issues Outcome Recommended

For example, see recommendations:

16. Recruit Stakeholders into National Governing Bodies 17. Expand 'Extraordinary Members' into Forum 28. Nominate Two Board Members from Forum

Join the Common Battles
Advantages

PEFC could identify global priorities of ENGOs and join them at the global level

Disadvantages

- Proves PEFC’s greater interest is the common good; provides opportunity for education of broader audiences; contributes to better PEFC understanding of evolving needs for the organisation’s metastandard - Will require resources and investment of political capital that otherwise could be invested in members directly; greater political

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risk at international level Outcome For example, see recommendations: Recommended

12. PEFC International Conference on Forestry and the Environment 21. Launch Tropical Initiative 38. Lead Forestry Policy on Carbon

Engage Separate ENGO Platform
Advantages Disadvantages

PEFC could identify an international environmental umbrella organisation/platform/forum and engage ENGOs there without directly bringing them into the PEFC process

- Increases communication and engagement without dramatic costs or organisational changes to PEFC; access to broader range of ENGOs within an established framework - Limits positive, proactive contributions to PEFC were ENGOs directly engaged; little increase in transparency or perceived accountability Outcome Not Currently Recommended

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VI. RECOMMENDATIONS - “SO WHAT NOW?”
In considering options, and in line with its Mandate29, the Panel gave preference to recommendations that: • directly responded to one or more discrete elements of its mandate; • should have broad support among existing and potential stakeholders; • sit largely within the purview of PEFC itself (without significant dependencies upon external actors); • fit logically into an incremental process of improvement; • leads to enhanced credibility of the PEFC scheme; • would be financially responsible, reduce costs, or contribute a new funding stream for the organisation; and • contributed to addressing multiple issues at once. Phase One – Get Resourced Phase One recommendations are ‘immediate-impact’ options, identified both for their relative ease of initiation/implementation and their role as the basis for subsequent recommendations. Recommendations in this phase also include the first steps in longer-term, more complex initiatives. 1. Publish Governance Review Transparency has been identified as a priority for PEFC, as such, an important first step would be to publish this Review prominently on the PEFC web-site, and to publicise it widely. Also publish the Executive Summary separately for ease of review, and add a link to a ‘Comment’ form or E-mail. Receipt of comments should be acknowledged promptly (e.g. within three business days), and collected for review as part of the annual governance process. 2. Establish International Headquarters In line with its expanded responsibilities and capacity, rename the Secretariat the “PEFC International Headquarters”, and re-title the Secretary-General the “Director-General” of the organisation. The Director-General should research possible international and professional fora that PEFC could join, both to contribute to broader understanding of the organisation’s Mission, but also to provide a network of peers and resources that may prove helpful in growing membership and implementing changes recommended in this document.

29

See section I “Introduction” for the full mandate of the Panel

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3. Review Board By-Laws (Executive Committee) Review, clarify, and revise existing procedures on the Board’s Executive Committee for transparency (for example, how the Chair and Vice-Chairs are selected, what decisions are within their purview, when meetings take place, how minutes are distributed to the full Board.) 4. Update Staff Position Descriptions
“If the Secretariat’s going to do all this, they better have the right people, and the right people in the right jobs”

Bring position descriptions of staff in line with responsibilities anticipated in the Geneva office, and develop draft position descriptions for roles likely to be needed in the next twelve months. Staff position descriptions may be posted along with staff photos and biographies on the PEFC web-site to allow interested parties a more complete understanding of various roles and responsibilities of key staff. 5. Delegate Operational Authority to Heads of Unit Give responsibility and authority to Heads of Unit to oversee relevant recommended changes in each of their respective areas, overseen by the Director-General. Given subsequent recommendations, the Director-General will be required to focus much more on organisational representation, building partnerships and alliances, and engaging various stakeholders. Management of Heads of Unit will have to be balanced with this expanded external advancement of the organisation. 6. Quantify PEFC ‘Impact’
“Yes, but what does 200 million hectares really mean?!?”

Begin to identify the impact of PEFC’s work in terms of environmental, social, economic, or political impact on sustainable forest management and noncommercial interests (for example, “Every hectare of PEFC certified deciduous forest removes X tonnes of carbon dioxide from the atmosphere every year…”) Stakeholders to PEFC could also be engaged to contribute to this process in the areas of their expertise (e.g. an NGO involved with indigenous populations could provided content and arguments for certified forestry’s positive impact on that constituency.) A more direct understanding of PEFC’s contributions will be critical for improved public relations and brand recognition, fund-raising, and membership development.

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7. Commit to the ‘High Road’ Develop an internal policy, with guidance and draft materials/text for PEFC leadership, staff, and members that sets out an organisation-wide principle of universally constructive response to criticism; the most strident or vitriolic the attack, the more gracious and engaging the response should be, consistently across the organisation. 8. Apply the ‘Plain-English’ Principle
“The whole system is very complicated, not easy to understand by layman. Public relations work should be strengthened for general public”

Create versions of the most frequently accessed PEFC resources (for example “Elements of credible forest certification schemes”) free from expert language for the non-technical reader, and highlight PEFC efforts in broader communities more prominently (namely content currently located under “Did you know?” on the web-page); 9. Promote a ‘Management-Summary’ Practice Ensure that PEFC documents, reports, and technical documents are prefaced by a short, easy-to-understand summary of the key points, and where applicable include a recommendation for decision-making; 10. Update Website for Accessibility Redesign the PEFC web-site to have four distinct, dynamic, and wellsupported functions: • First – PEFC’s customers, licensed users of the logo, and consumers of PEFC certified products; • Second - general information for the public, media, civil society organisations, and the environmental movement; • Third - technical information for forestry agencies, certification, accreditation, and standards specialists, as well as the academic/ scientific community; and • Fourth - a ‘members-only’ section with discussion forums, PEFC resources, organisational updates, and opportunities for peerbased networking and information-sharing. In addition, the web-site needs to improve the ‘Frequently Asked Questions (FAQ)’ (currently published as “Did You Know?”) and add a ‘What Do I Do If…’ section both to cover the most common issues visitors will have, but also as a resource for PEFC Members on the organisation’s position and perspective on a variety of subjects (‘High Conservation Value’ forests, contributions of certified forest to carbon mitigation, and so on).

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11. Invest in Marketing Capacity
“PEFC needs greater resources in its management to serve the corporate policy requirements of advancing its brand.” “At this point it is about awareness. The elements are strong at this point. They will evolve with maturity of the system as a whole. Inform, Persuade, Purchase,”

PEFC has a dynamic and engaging story to tell, and needs the capacity to promote the organisation globally to the media, potential new members, the general public, and stakeholders; PEFC should also explore parallel opportunities for promoting the organisation’s work and value-added, including targeted sponsorship of events, research, or initiatives, mutual endorsement of complementary efforts in environmental sustainability, or donations to key stakeholders and partners. Any Marketing plans should also consider, engage, and build upon PEFC Promotion Initiatives globally, as well as be leveraged through them, and coordinated with National Governing Bodies as set down in the PEFC Strategic Plan, including national schemes in a unitary certification model30. 12. Join Stakeholder Initiatives
“There are some stakeholders who will not or have difficulty in engaging, so need to have outreach to get them talking, observing, presenting...to get them into the 'tent'.”

PEFC should review options to join stakeholders’ initiatives (for example, Conservation International’s ‘Center for Environmental Leadership in Business’, or the International Union for Conservation of Nature’s ‘Commission on Environmental, Economic and Social Policy’) both to support complimentary efforts in sustainability and promote a broader understanding of PEFC’s work and contributions. Changing critical opinions of PEFC will take deliberate investment in dialogue, as well as incremental demonstration of ‘game-changing’ policy and action in PEFC’s membership and sphere of influence to convince key stakeholders of the sincerity of the organisations desire for collaboration.

PEFC Strategic Plan (Internal), Core Strategies, Paragraph 2 –"Bearing in mind that an external impact and image study undertaken for PEFC has clearly identified the lack of recognition of a single PEFC brand as a constraint to market access the strategy will emphasise the inclusion of national schemes, such as FFCS, CSA, AFS and SFI, within a unitary certification model. This will need to be communicated to all influential procurement policy makers and to others who influence those policies"
30

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13. PEFC International Conference on Forestry and the Environment Announce a PEFC-sponsored conference in Geneva (targeted to take place in 2009) with the express purpose of inviting participation and dialogue with Environmental NGOs. Form and support a four-person conference planning committee with two PEFC representatives, and two ENGO representatives (paid as consultants) to develop conference agenda, and negotiate broad participation. The Conference should serve as a key event to invite dialogue, engagement, and admission to the Stakeholder Forum, as well as identifying priorities and a work-plan for addressing areas of improvement in the PEFC meta-standard and process. 14. Develop Annual Internal Governance ‘Check-Up’
“Have an assurance process for governance process (independent view and external review.) Part of annual report should include governance audit.” “Send out questionnaires to different stakeholders or to make it on-line on the regular basis; to organize interview with different people from very different countries, etc.”

Include an internal review of organisational governance as part of the PEFC annual reporting process (in the same way as the financial audit) conducted by a variety of internal stakeholders in a consistent methodology to allow for measurement of progress over time. Include a review of Board capacity, procedures and goals against organisational strategy and changes in the sector. Participation in international fora, and development of a strong network of peers in similar organisations, the diplomatic and governmental sectors, and NGOs active in the environmental or standards sectors will provide valuable insight and resources in crafting dynamic and substantive options for regular review. 15. Volunteer for One World Trust’s Governance Review
“Good governance requires a systematic review process with outside ‘pair of eyes’”

Invite One World Trust, a leading not-for-profit organisation focused on accountability within international organisations and corporations, to include PEFC in their annual review31 of the governance of international transnational corporations, international NGOs, and international organisations.

31

See: http://www.oneworldtrust.org/

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Improvement against the One World Trust’s standard should begin immediately, with the aim of the formal review of PEFC taking place by the 2010 publication cycle. Phase Two – Get Structured Phase Two recommendations are a mix of ‘next-step’ suggestions for previous initiatives and organisational changes that will take some internal preparation and development. 16. Strategically Update Board Model
“As the organisation matures it should have a board that balanced and representative of the key stakeholder interests and be able to demonstrate that this includes the industry, environmental and social components.”

Develop an updated model of a Board comprised of a diverse mix of individuals with both relevant skills, and representational constituencies (e.g. forest owners, environmental NGOs, corporate leadership, labour organisations, indigenous organisations.) Also consider the utility and format of Board sub-committees (e.g. finance, fund-raising, environment, marketing, technical/expert), and opportunities for additional sub-committee membership from the Stakeholder Forum. As current Board members’ terms expire, ensure that replacement members’ backgrounds match strategic goals. 17. Focus Board Role
“I feel members should determine policy through membership of the board, although other stakeholders should also be included. If the board is structured fairly NGBs should have no problem implementing its decisions. I think this is also the most workable model in terms of practical decision-making.” “Board cannot take a critical look in the endorsement decisions even if consultant points out weaknesses in the basis for the assessment process for an individual scheme.”

Draft a new preface to by-laws focusing Board duties on four primary functions: management and financial oversight, networking and fundraising, promotion and outreach, and strategic planning. Operational, administrative, and technical issues should be the responsibility of the PEFC International Headquarters. 18. Recruit Additional Stakeholders into National Governing Bodies (NGBs)
“The national level is more personalized and makes country feel special attention is given them, which would be favourable to integrating PEFC practices.”

Encourage, facilitate, and assist National Governing Bodies to identify and recruit a wide variety of local stakeholders to participate in their activities and

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decisions. As members of NGBs, stakeholder representatives should be able to participate substantively in PEFC International. National and local stakeholders can be represented at the National Governing Body level (in contrast to international institutions who can participate in the Stakeholder Forum.) However, nothing prevents national stakeholders from earning prominence in NGBs and through them participating at the international level. 19. Expand ‘Extraordinary Members’ into a Forum
“Promotion and marketing and partnership alliances. PEFC lacks credibility in the market place and with some governments. It needs to build alliances with organisations from which it can learn and which will add credibility to its activities.”

PEFC ‘Extraordinary Members’ should be expanded to include a broader range of stakeholders, be renamed the ‘Stakeholder Forum’32, and be granted specific rights and responsibilities in the organisation’s governance process. International institutions can become members and contribute to the PEFC process in a number of ways, including membership fees, seconded staff, technical expertise and resources, joint projects, or organisational leadership. 20. Add Stakeholder Forum ‘Right of Agenda’
“Accept that multi-stakeholder participation means multi-stakeholders develop and drive the system”

The Stakeholder Forum should have the right (as a collective body) to add policy and other issues to the agenda of the PEFC General Assembly in its periodic meetings, and to convey to the PEFC International Headquarters Requests for Review on specific issues or questions identified by its members. 21. Expand Secretariat Capacity
“PEFC's legitimacy is delegated. It would probably benefit from more centralization (moving from association to confederal).”

The management, administrative, and technical capacity of the Secretariat should be expanded to better support PEFC members, develop an increasingly robust ‘meta-standard’, and expand membership and partnerships. The Director-General, in conjunction with key staff and other personnel as necessary, should develop a detailed work-plan detailing timelines, budgets, and the process for expanding capacity and delivering additional value to

32

See ‘Appendix E – PEFC Stakeholder Forum’ for more information

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members and the field in line with recommendations in this Review and the PEFC Strategic Plan. 22. Tighten Independent Consultant and Panel of Experts’ Role
“The Panel of Experts? It's a rather shadowy body within the PEFC structure.” “Weakness: Independent auditors - mostly a shame on us - we don't educate them enough to really understand the meta-standard and/or national standards.” “Even as a national member, the Panel of Experts hasn't been sold to the membership. Has been seen as a blockage to date from this far away!”

Establish an augmented set of position descriptions, compressed workflow/time-table, minimum requirements for professional eligibility, qualification test, formal review mechanism for quality of completed work, terms of reference that includes a signed ‘Statement of Independence’ for each consultant. The primary objective of the Independent Consultants’ work should be consistent quality. As such, the Director-General should take appropriate steps to establish a professional standard of knowledge required of prospective consultants, and regularly review that standard for applicability, and opportunities of improvement. Similar steps should be taken for the Panel of Experts. In recognition of new and more robust expectations for both functions, previous engagement should not necessarily be considered sufficient qualification for subsequent contracts. 23. Launch Tropical Initiative
“The problems and complexity for certification of natural tropical forests need greater appreciation”

PEFC should partner with a complementary organisation of excellence (e.g. ITTO, or the Rain Forest Trust), or lead an initiative in advancing sustainable forest management in tropical forests, utilising the project also to expand membership, create new alliances and promote the PEFC standard’s contributions in the developing world. While PEFC has a great deal of collective expertise, this initiative should contribute to educating the organisation about the unique challenges of working in tropical forestry and the countries where they are located. Special care and attention should be paid to differences in PEFC processes necessary to contribute to these specific challenges or in these regions.

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24. Add Fundraising Capacity
“Fundraising - all organisations need a good capital basis and recurring funding to expand and move forward”

Recruit a dedicated fund-raiser in the PEFC International Headquarters to identify and leverage non-membership based funds, including contract and grant funding in forestry from international development organisations and donors (e.g. World Bank, DFID, UNDP, EU.) 25. Increase Support to Members
“Sharing of information on good practices adopted to national schemes, open discussion and constructive criticism on elements that need improvement in national schemes. Increased expertise among national governing bodies and board members.”

The PEFC International Headquarters should survey existing members to identify and provide additional support (for example, collecting and disseminating members-only ‘best practices’, building a database of technical experts and key contacts globally, image library, draft marketing materials, procurement database, conducting training, comparative budget templates, support to increase market share, and other services.) 26. Sponsor Applied Research in Environmental Impact
“International Policy Leadership/Human Resources support. PEFC cannot meet the policy challenges which the anti-forestry sentiment prevalent today is presenting.”

Invite the Stakeholder Forum to identify and commission independent research on at least two major issues, advancing the field of sustainable forest management. While such research is initially an opportunity to substantively engage PEFC stakeholders, the process should be carefully considered for longer-term opportunities in quantitative analysis and research, perhaps in partnership with academic or international institutions. 27. Create ‘Entry-Level’ Tier of Endorsement
“Focus on legality in developing world? Yes, thought leadership is pointing this way.”

With an aim to expanding membership globally, PEFC should create an ‘entry-level’ tier of endorsement (including separate tools and processes such as the chain-of-custody procedure) based upon timber legality certification to allow significantly more developing countries to begin participating in the PEFC process. This level of certification should be carefully distinct from mutual recognition, and in no way ‘dilute’ or weaken the PEFC metastandard.

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The Director-General should research and engage other organisations that work in this type of international development, and create a comprehensive plan for ventures in this field, including plans for risk-analysis and mitigation. 28. Provide Capacity-Building Assistance
“New members, typically from less developed countries, faced serious problems of ‘institutionality’ (weak institutions in their country)…and they become weak elements of the PEFC chain, the easiest to be attacked and to discredit the whole system”

Develop the Technical Unit of PEFC with specific staff capacity to provide capacity-building services to members and prospective members, and serve as the implementation function of the PEFC Secretariat in its partnerships (contractual or otherwise) with international and development organisations. Revenues from technical assistance projects can also provide an important funding-stream for the organisation, and can serve as an additional opportunity for Stakeholders to participate in PEFC’s broader work of sustainable forest management. The Director-General should engage with international organisations and consider short-term engagement of experienced personnel in development operations to contribute to PEFC’s planning and implementation process. Phase Three – Get Engaged Phase Three recommendations are significant changes, medium-term projects, or major milestones in incremental organisational re-alignments. They will require significant preparation, and systematic engagement of internal and external stakeholders to ensure sufficient buy-in. 29. Post Position Descriptions for ‘Seconded’ Staff Create a mechanism for and encourage PEFC Members to second appropriate staff for specific needs in the PEFC International Headquarters (identified in the revised organisational chart and position descriptions) for a period of no less than one year. Secondment (paying the salary of a full-time employee who works in the Secretariat) increases opportunities for leading Members to contribute to the organisation, and reduces operating budget costs while advancing new capacity and initiatives. 30. Nominate Two Board Members from Forum The Stakeholder Forum should have the right to nominate two members of the PEFC Board of Directors through the PEFC Nominating Committee (or through any revised process)..

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31. Nominate Members of the Panel of Experts from Forum The Stakeholder Forum should have the right technical/standards advisors to the PEFC Panel of Experts. 32. Name Board Member to Chair Stakeholder Forum One of the Board members (not nominated by the Stakeholder Forum) should be named to serve as the Co-Chair of the Stakeholder Forum, working with the internal leadership set up by that body to integrate it dynamically into the organisation. The Board Co-Chair should serve as an additional point of contact for Stakeholders (in addition to Board Members nominated by the Forum) and work actively with them to find new opportunities for substantive engagement, dialogue and growth. 33. Revise Engagement Between Board and PEFC International Headquarters Recognising that the Board will be taking a higher-level role in the organisation’s Mission33 and delegating operational and administrative management to the PEFC International Headquarters, the Panel recommends developing a more consistent and integrated working relationship between the PEFC International Headquarters and the Board34 to ensure necessary support and oversight. 34. Review and Clarify PEFC Complaints and Appeals Procedures Review existing decentralised Complaints and Appeals Procedures in each element of the certification process and provide a user-friendly interface on the PEFC web-site to facilitate understanding of the appropriate levels and recipients for complaints and appeals. Publish complaints submitted through the formal PEFC process and their responses on an appropriate page of the PEFC web-site. Further, initiate a dialogue with key partners and stakeholders with an aim to integrating and simplifying complaints and appeals procedures as much as possible, and providing a point of contact and process within the PEFC international process to facilitate review and redress of complaints at the national level or in other organisations (e.g. accreditation bodies, or local certification agencies.) to nominate

See Recommendation 17 – ‘Focus Board Role’ In whatever form the current Executive Committee emerges in the new Board model – see recommendation 16
33 34

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35. Reduce Number of Board and General Assembly Meetings
“Faster decision-making (e.g. by Internet ballots on various issues between regular meetings and General Assemblies)”

Review the frequency of recurring organisational meetings (recognising that Special Sessions of the Board and other bodies may sometimes be necessary), and incrementally reduce the number of ordinary meetings as the capacity of the International Headquarters increases. Set a long-term goal of two inperson meetings a year (per the PEFC Statutes35) supplemented with virtual meetings as necessary (particularly from 2008-2010 during implementation of these recommendations.) Additionally, invest in high-quality ‘virtual meeting’ technology, as well as dynamic technologies to enable a continuous dialogue among members. Extend the General Assembly to three full days from one and a half to allow for more substantive debate on issues and effective networking and education of members. 36. Leverage Engagement with FSC
“FSC isn’t the enemy. Perhaps PEFC needs to give them a fine reputation to live up to.”

PEFC should increasingly engage with FSC in areas and endeavours of mutual benefit or concern (e.g. illegal logging), increasing communication, and where a ‘united front’ can advance the global interests of sustainable forest management (for example, inviting FSC to General Assemblies, exchange of staff at headquarters, joint development projects, mutual recognition of timber legality certification, joint chain-of-custody certification, and/or collaboration in forestry projects with international development organisations.) Recognising the comparative advantages in both organisations, and the complementarity of their respective certification processes, PEFC should actively recognise, promote, and invest in their common cause and agenda (e.g. carbon mitigation, combating illegal logging, or promoting sustainable forest management.) 37. Give Stakeholder Forum Votes in the General Assembly
“Needs some kind of structure where the key stakeholder groups have balanced decision-making authorities.”

Give the Stakeholder Forum votes up to 50% (rounded down) of those of PEFC Council (e.g. there are currently 35 PEFC Council members who have a
PEFC Statutes, Article 6, Paragraph 5 – “The Chairman convokes the Board meetings at least twice a year with a notice of at least four weeks.”
35

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total of 61 votes36, the Stakeholder Forum would have 30 votes on that basis.) Members of the Stakeholder Forum will decide internally how those votes are allocated37. Phase Four – Get Influential Phase Four recommendations are ‘capstone’ conclusions to which many other preceding initiatives lead. Implementing these recommendations should actually begin as early as possible, recognising the long lead times for collective opinion within and outside the organisation to change sufficiently to make these issues essentially self-evident by the time all others have been completed. 38. Lead Forestry Policy on Carbon
“Process could evolve in a more 'global' scheme than just addressing the forestry issues but integrating gradually other environmental concerns like the carbon footprint of the products for example.” “Climate debate might affect PEFC’s role - e.g. storing carbon in forests. That would change PEFC’s governance.”

PEFC should engage relevant international organisations (e.g. the United Nations Framework Convention on Climate Change (UNFCC), or the World Bank Forest Carbon Partnership Facility (FCPF)) to offer the organisation’s technical assistance in establishing and implementing the global standard for forestry’s contribution as a carbon sink in a post-Kyoto Protocol agreement. 39. Update PEFC Brand
“Name/acronym should change - bland, bureaucratic, not sexy”

The PEFC brand should be reviewed for accuracy and comprehensiveness with new organisational alignment and expanded focus and stakeholder engagement. The Panel’s recommendations are incremental, mutually reinforcing and inter-dependent, and envisaged to take place ideally within two years.

PEFC Member-Schemes may have more than one vote based their certified hectarage, so that the largest members of PEFC may have up to five votes on issues. 37 See ‘Appendix E – PEFC Stakeholder Forum’ for more information
36

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APPENDICES
A. International Oversight Panel Biographies B. International Oversight Panel Terms of Reference C. PEFC Governance Survey D. Governance Recommendations by Subject Area E. PEFC Stakeholder Forum F. PEFC Organisational Structure G. PEFC Assessment, Endorsement and Mutual Recognition Process H. “Evaluating Legitimacy and Quality of Forest Governance” by Tim Cadman

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A. International Oversight Panel Biographies Jamie Lindsay, Chair Lord Lindsay is currently Chairman of UKAS (United Kingdom Accreditation Service), the agricultural group SAC Ltd, and Deputy Chairman of the UK Government’s Better Regulation Commission. Jamie’s other current appointments include non-executive directorships at Scottish Resources Group and British Polythene Industries plc. His career has included a number of senior Public, Private and NGO sector appointments. From 1995 1997, he was the Scottish Minister with responsibility for agriculture, forestry, environmental protection, countryside the sustainable development. Since then he has had a number of government appointments relating to standards and sustainable development. He has served on the board of commercial companies or organisations including UA Group plc, Assured British Meat, Genesis Quality Assurance Ltd and Scottish Quality Salmon. In the NGO sector, Jamie is a Vice President of RSPB and between 1998 and 2003 was chairman of RSPB Scotland and on the RSPB Council. He chaired the Marine Stewardship Council’s Governance Review between 2000 and 2001 and from 2001 until 2005 was Managing Director of the MSC’s trading arm MSCI. Jamie is also President of the Royal Scottish Geographical Society and Vice President of the International Tree Foundation, having served as ITF’s President between 1995 and 2005. Björn Andrén Björn Andrén is Managing Director of Holmen Skog AB with responsibility for Forestry and Wood Supply to the Swedish Holmen Industries. He serves as the Chairman of the Forest Committee of the Swedish Forest Industries, and as Director on the Boards of the Forest Research Institute, Skogforsk; the Forest Faculty of the Swedish University for Agricultural Sciences SLU; and PEFC Sweden. He is a member of the Royal Swedish Academy of Agriculture and Forestry, KSLA. Jon Dee Internationally, Jon Dee is best known as the founder of Planet Ark, 'World Environment News' and his 14 country 'World Environment Review' poll. Some of Jon's initiatives have become role models for international change. He initiated the successful lobbying campaign for Australia's 3 year phase-out of incandescent light globes - a move that has since been copied by other countries. Jon also spearheaded the highly successful campaign to phase-out Australia's usage of plastic bags. This campaign has led to a Government announcement that Australia will phase-out free plastic bags by the end of this year. Five years ago, Jon and Ben Kearney got the town of Coles Bay to become
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Australia's first plastic bag free town. Many communities around the world have used Coles Bay as their role model for taking similar action. Indeed, Jon was Rebecca Hosking's key advisor in telling her how to turn Modbury into Britain's first plastic bag free town. In 2007, Jon was the media spokesperson for the Australian release of Al Gore's 'An Inconvenient Truth' DVD. In June 2007, he also spoke at the House of Lords to launch his 14 country 'World Environment Review' poll, which was carried out in partnership with GMIPoll from Seattle. Jon founded Planet Ark back in 1991 in partnership with close friend Pat Cash. Jon is also the founder of Planet Ark initiatives such as 'World Environment News' (used by 8 million people a year), ‘Cards 4 Planet Ark’ (over half a billion greeting cards recycled), RecyclingNearYou.com.au (used by one million people a year), Australia's 'National Recycling Week' and 'The National Recycling Hotline', to name but a few. Together with Olivia Newton-John, he also founded Australia's 'National Tree Day', an event for which 1.2 million volunteers have planted more than 12 million native trees and shrubs. In the media, Jon's columns have millions of readers. He writes the 'Eco-Agogo' environment column in Australia's biggest read weekly magazine 'Sunday' - which is distributed with 'The Sunday Telegraph' and 'The Sunday Herald-Sun'. The column now also runs in The Sunday Times 'STM' magazine in WA. He also has a number of regular environment columns in Australian motoring magazines. Jon hosts the environment TV series ‘Tipping Point’, which airs on the hour every hour on 'The Weather Channel' on Foxtel and Austar. He is also a regular guest on Channel Nine's national 'Today Show'. Jon has directed and produced over 300 environmentally-focussed TV and radio adverts. These have featured people such as Tom Cruise, Kylie Minogue, Sir Richard Branson, Dustin Hoffman, Nicole Kidman, Pierce Brosnan, Olivia NewtonJohn, Rolf Harris, Steve Irwin and many others. Jon is the Chairman of Planet Ark. Prior to this, Jon was the organisation's Managing Director - a role he held for 15 years after he and Pat started the organisation back in June 1991. He is now the Managing Director of Issues Solutions, where he advises leading companies on the many ways that they can help the environment. Jon is married to Leanne Dee and they have two daughters - Estelle, who is four and Claudia who was born on Oct 20th 2007. Jon and Lee met in London back in 1991 and they live in Yosemite in the Blue Mountains outside of Sydney.

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Dr Johannes (Hans) Drielsma Hans Drielsma is a Director of Australian Forestry Standard Ltd, and also a Director of PEFC Council International. He has been involved with the development of the Australian Forest Certification System, and its endorsement by PEFC over the last 10 years. Dr Drielsma is employed as Executive General Manager of Forestry Tasmania, the government-owned business enterprise which manages Tasmania’s State forests, where he has responsibility for resources, planning, environmental management, business systems, information technology and forest research. Forestry Tasmania is an ISO 14001 and AFS certified company. Dr Drielsma has a Bachelor of Science (Forestry) with Honours from the Australian National University, Canberra, and a Master of Forest Science and Doctorate from Yale University. Dr Drielsma is a member of the Tasmanian Forest and Forestry Industry Council and the Tasmanian Forest Practices Advisory Council, a Director of the Cooperative Research Centre for Sustainable Forest Landscapes, the Tasmanian Timber Promotion Board, and a fellow of the Australian Institute of Company Directors and Institute of Foresters of Australia. Dr. Maharaj Muthoo Maharaj Muthoo, PhD, President, The Roman Forum, Former Director of FAO's Forestry Operations and Former Executive Director of the Forest Stewardship Council Dr. Muthoo is the President of Roman Forum. It is the successor to the Club of Rome, which made the wake-up call about the earth's resources by publishing the celebrated "Limits to Growth". Its mission is to build partnerships among countries and synergies among international agreements on global issues of environment and development. In addition, Maharaj is heading Agronomes et Forestieres sans Frontiers and the Hari Environment and Development Society. He is a visiting professor and resource person at various institutions, such as at the Vienna Forest Policy and Economics Institute, the UN University, and the Italian Inter-University Centre for Sustainable Development, where he is also the Chairman of its Scientific and Academic Council. The last position held by him was of the Executive Director of FSC, where he put in place a strategic review, which led to the establishment of its International Centre at Bonn. He was FAO's Director of Forestry Operations for 15 years, during which time he raised around US$ 2 billion in donor resources and counterpart contributions for international cooperation on sustainable forest management and related programs and projects. Dr. Muthoo's areas of expertise are sustainable development and international cooperation with a passionate dedication to the cause of one world, its tropical forest heritage and poverty eradication. Maharaj is of Indian origin with a doctorate in development from Oxford,

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forestry honours degree from Wales, MPA from Harvard, and economics and biology degrees from India. Frederick M. O’Regan Mr. O’Regan is currently Chief Executive Officer of the International Fund for Animal Welfare (IFAW), a world-wide animal protection and conservation organization with headquarters on Cape Cod, Massachusetts. IFAW has sixteen international offices and a membership base of 1.4 million. It works in the areas of policy development, habitat, and direct assistance to animals. Before becoming CEO of IFAW, Mr. O’Regan was Peace Corps’ Regional Director for Europe, Central Asia and the Mediterranean, responsible for Peace Corps operations in 24 countries in Central and Eastern Europe, the Republics of the Former Soviet Union, North Africa, and the Middle East. The Region is comprised of 2,000 volunteers and staff, working in the environment, education, and business development. Before being appointed to the Peace Corps, Mr. O’Regan was Program Director with the Aspen Institute heading a national action-research program on employment-generation and business development among the poor within the United States. He has also headed Community Economics Corporation, a policy and consulting organization specialized in developing local-level economic and development programs in the U.S. and the Third World. In this capacity he advised major foundations, the World Bank and USAID on economic development programming. This work included the development of the first major lending programs in the black townships of South Africa. During the 1992-93 academic year Mr. O’Regan was Visiting Professor of Public and International Affairs at the Woodrow Wilson School, Princeton University where he taught community-based economic development at the graduate level and guided research. From 1984-89 he headed the Kenya Rural Enterprise Program, an intermediary finance and training organization for small-and micro-enterprise development. This work included efforts to involve indigenous populations around game parks to participate in tourist-related activities and animal protection. He founded and co-directed the Development GAP (1977-84), an advocacy and consulting organization in international development. Mr. O’Regan was Program Director of the Community Action Program in Cambridge, Massachusetts (1974-77), and began his career as a Peace Corps volunteer in Swaziland, 1969-72. He has published numerous articles and papers on international development and co-authored two books on development assistance policy and economic development among the poor. Dirk Teegelbekkers Dirk studied forest science at the University of Munich, and had his traineeship at the state forest administration of Hesse. His experience in the
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timber trade includes a forestation project of GTZ and the state forest administration of Hesse in China. He has also worked as a deputy at the state forest department of Hofheim im Taunus, and as a scientific assistant at the Institute for Forest Economics and Inventory at the University of Dresden. He has been the General Secretary of PEFC Germany since 2000.

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B. International Oversight Panel Terms of Reference Mandate In accordance with and subject to the PEFC’s Strategic Plan (including the vision, mission, purpose, core values & beliefs, principles and goals contained therein), the panel will update the PEFC Council, its rules and standards by: • improving external perceptions of PEFC’s governance; • making the PEFC organisation more effective; • ensuring that PEFC’s rules and standards are simple and easy to understand; implement and operate; • ensuring that PEFC robustly implements and continuously monitors its own requirements at all levels; • ensuring “buy-in” from PEFC’s existing stakeholders; • removing obstacles to dialogue with environmental non-government organisations (ENGO)s. Terms of Reference PEFC is delegating responsibility for the governance review to a Panel, which will be facilitated and supported by Z/Yen Group Limited (Z/Yen). Specifically, the review will: • examine the current PEFC governance structure; • consider the governance plans of other similar international institutions; • survey relevant people (probably several hundred people would be asked to participate) from various interested constituencies and sectors; • deliver a report, including recommendations with respect to: • internal structures and organisation; and • external services and transparency. In fulfilling these terms of reference, the Panel shall be entitled to consult with any and all sources, individuals and organizations that it believes appropriate. Membership The Panel itself should contain representation from the main interested constituencies to ensure that the process of the review itself has widespread credibility and transparency; we currently envisage three members being chosen from the PEFC Council, and the remaining four, including the Panel Chair, being chosen from external, interested constituencies.

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Term The Panel will submit its final report and recommendations as soon as possible, ideally within 90 to 120 days of its establishment. The recommendations shall be made public. Meetings The Panel shall meet as necessary in order to complete the terms of reference (probably three meetings), including at least one face-to-face meeting.

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C. PEFC Governance Survey An on-line survey was developed and widely publicised, including prominently on the PEFC website for the duration of the Review. The survey was announced on PEFC’s mailing list (to approximately 4,500 people), in Z/Yen’s periodic newsletter (to approximately 2,500 people), and in World Environment News (to approximately 20,000 people.) Participation in the survey was voluntary and anonymous, and was managed in its entirely by Z/Yen. In total, 152 people completed the survey. This number compares favourably with the participant levels in other, similar reviews. The quantitative results are appended.

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PEFC Governance Review (v 1.2)
Results Overview
Date: 5/11/2008 1:42 AM PST Responses: Completes | Partials | Screen Outs Filter: No filter applied

Respondent Details
Respondent details will not be attributed to answers/comments, and only used in aggregate to ensure a representative sampling of organisational and geographic input.

3.

Type of Organisation 18 9 3 14 4 8 1 5 0 1 16 11 2 4 9 14% 7% 2% 11% 3% 6% 1% 4% 0% 1% 13% 9% 2% 3% 7%

Forest land owners; Forestry management; Forestry workers; Timber production companies; Timber production workers; Timber product wholesalers; Timber product retailers; Trade associations; Financial services (e.g. trade finance); Consumer associations; Environmental NGOs; Academic community; Standards bodies; Certification bodies; PEFC National Governing Body National government and quasi government bodies; International governmental and quasi governmental bodies (e.g. EU, WTO).

5

4%

1

1%

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Other, please specify

48

38%

5.
Asia;

Which part(s) of the world do you primarily focus on in your work? 62 14 13 21 7 4 32 48% 11% 10% 16% 5% 3% 25%

Europe;

Australasia/Oceania; North America; Central/South America; Africa; International/Global;

6.

At what level do you or your organisation typically work: locally, nationally, regionally, or internationally? 27 63 25 34 16 21% 49% 20% 27% 12%

Local (e.g. Kuala Lumpur); National (e.g. Malaysia); Regional (e.g. Southeast Asia); International (e.g. Globally); Multiple Jurisdictions

Section 1 (of 6) - Introduction
Governance can be defined as “how an organisation reaches its goals without compromising its values.” More specifically, governance is often said to be made up of three main components or approaches: Formal Compliance: Direct compliance with legislation and recommended practice, e.g. UN Statement of Good Practice, OECD Principles of Corporate Governance and, in PEFC’s particular case, ASBL law and IAF principles as well. In short: legislation, and recommended practice. Constitutional Structure: thinking from the perspective of powers, checks and balances, and representation. For an organisation like PEFC, this should mean ensuring that the ‘constitution’ for PEFC covers the following aspects of legislative, executive and judicial powers: stakeholder inclusiveness, separation of powers, decision-making processes, and ethical standards. Systems Integrity: developing, maintaining and enhancing organisational system’s to help reach the organisation’s goals. For an organisation like PEFC, this should include: strategic planning, human resources management (both executive and governing bodies), transparency and disclosure, audit and accountability.

8.

Which of the three aspects of Governance above do you feel is most important to PEFC? Rank them in order (1 "Most Important" to 3 - "Least Important")
1 2 3

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

19
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19

31
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Formal Compliance; Constitutional Structure; Systems Integrity;

19 28% 22 29% 38 49%

19 28% 32 43% 23 29%

31 45% 21 28% 17 22%

10.

How would you rate PEFC's Formal Compliance in the following areas?

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Very Strong

Strong

Adequate

Weak

Very Weak

Legislative and Regulatory Administrative and Standards Compliance

14 19% 18 25%

39 53% 28 38%

17 23% 22 30%

4 5% 4 5%

0 0% 1 1%

12.

How would you rate PEFC's Constitutional Structure in the following areas?

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Very Strong

Strong

Adequate

Weak

Very Weak

Stakeholder Inclusiveness Separation of Powers Decision-Making Processes Ethical Standards

13 18% 20 28% 7 9% 17 23%

22 30% 15 21% 26 35% 30 41%

22 30% 28 39% 31 42% 23 31%

11 15% 7 10% 9 12% 3 4%

6 8% 2 3% 1 1% 1 1%

14.

How would you rate PEFC's Systems Integrity in the following areas?

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Very Strong

Strong

Adequate

Weak

Very Weak

Strategic Planning Human Resources Management Transparency and Disclosure Audit and Accountability

8 11% 4 6% 21 29% 16 22%

22 31% 24 35% 21 29% 25 34%

34 48% 33 48% 18 25% 25 34%

7 10% 8 12% 11 15% 6 8%

0 0% 0 0% 2 3% 1 1%

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Section 2 (of 6) - Organisational Structure and Management
The extent to which an organisation is centralised depends on two main dimensions: - the extent to which its legitimacy is intrinsic to the organisation itself, rather than delegated by members and/or member bodies; - the extent to which operational authority is exerted centrally or elsewhere (e.g. by member bodies). The diagram below illustrates these dimensions, dividing organisations into four types with (somewhat simplistic) definitions and examples for ease of reference.

Image Based on the above analysis, PEFC is currently closest to an ‘Association-style’ organisation, with authority held by the members (National Governing Bodies), who meet at least annually to decide policy and direction, delegating authority to the Board and Secretariat. The Board of Directors represents the entire membership, and an International Secretariat carries out decisions and administrative duties as directed. Like any other organisation, the formal structure (on paper) may not necessarily or completely represent the de facto structure in reality. Some other examples: In a 'Federal-style' organisation, members make decisions together on a day-to-day basis, the implementation of which is carried out in each organisation or country; [E.g. PEFC Council, Board of Directors would be more powerful, and National Governing Bodies would decide how to implement their decisions to meet local needs] In a 'Unitary-style' organisation, issues would be debated and decided centrally in headquarters, which would also manage their implementation in the field; [E.g. PEFC Council, Board of Directors take all substantive policy and standards decisions, operations are implemented by the Secretariat using resources of National Governing Bodies] In a 'Confederal-style' organisation, the headquarters has the resources and authority to represent and carry out policy set by members on a regular basis. [E.g. PEFC Council would set strategy, policy, and endorses the 'meta-standard', while the Board of Directors and Secretariat would independently advance the organisation's Mission internationally]

17.

Rank the four organization types illustrated based upon your opinion of which would best advance PEFC's Mission in the future (1 = "Most Suitable", 4 = "Least Suitable")

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

1

2

3

4

Association Federal Unitary Confederal

24 42% 14 25% 6 10% 15 25%

13 23% 15 26% 7 12% 23 38%

9 16% 21 37% 11 19% 16 27%

11 19% 7 12% 34 59% 6 10%

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19.

For each of the functions below, please tick whether you would like to see PEFC do more of/the same amount/less of each function (and have the necessary budget to do so):
More Of The Same Amount Less Of

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Promotion/marketing – promoting the work and aims of the organisation Fundraising – increasing budgetary capacity from various sources Membership/membership Events – increasing and deepening membership in the organisation Partnership/Alliances – building collaborative relationships with other organizations Enforcement – ensuring that PEFC systems are properly implemented and that infringements are satisfactorily dealt with International Policy Leadership – influencing global or bi-lateral/national policy to better match the aims of the organisation Education – building a deep understanding of the issues and challenges facing the organisation in the sector Technical Assistance – providing direct expert advise and consulting to members or partners to improve their systems and work Human Resources Support – enabling staff and volunteers to implement the organisation’s policies and decisions Research/Analysis – providing ‘thought leadership’ to the organisation’s stakeholders and deepening the knowledge base of key issues

49 78% 38 64% 19 32% 38 62%

13 21% 20 34% 39 65% 23 38%

1 2% 1 2% 2 3% 0 0%

38 58%

26 40%

1 2%

32 51%

26 41%

5 8%

28 47%

28 47%

4 7%

22 37%

35 58%

3 5%

19 34%

35 62%

2 4%

21 34%

37 60%

4 6%

The members of the independent Panel of Experts are appointed by the PEFC Council Board of Directors to undertake the following tasks: 1) Assess whether a revision is major or minor 2) In cases where a revision is deemed minor, to undertake an assessment of, and provide the PEFC Council Board of Directors with a report on, the conformity of the revision with the requirements of the PEFC Council 3) To act as a quality assurance team on the revisions and or external consultants reports on forest and/or optional national, regional or sectorial chain of custody standards and schemes submitted to the PEFC Council and to report to the PEFC Council Board of Directors accordingly 4) To provide advice to the PEFC Council Board of Directors when requested to do so by the PEFC Council Board of Directors.

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21.

In your opinion and experience, do you consider the PEFC Panel of Experts to be robust, adequate, or inadequate in the following areas?
Robust Adequate Insufficient

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Clarity of mandate/purpose; Number of experts; Capacity of experts; Diversity of experts; Quality of outputs/analysis; Accessibility to members;

20 41% 7 15% 6 12% 10 20% 6 13% 7 15%

20 41% 32 67% 36 75% 26 53% 32 70% 21 46%

9 18% 9 19% 6 12% 13 27% 8 17% 18 39%

Section 3 (of 6) - Role of Stakeholder Groups in PEFC
PEFC is an independent, non-profit, non-governmental organisation, founded in 1999 which promotes sustainably managed forests through independent third party certification. The PEFC provides an assurance mechanism to purchasers of wood and paper products that they are promoting the sustainable management of forests. PEFC has in its membership 35 independent national forest certification systems of which 23 to date have been through a rigorous assessment process involving public consultation and the use of independent assessors to provide the assessments on which mutual recognition decisions are taken by the membership. These 23 systems account for more than 200 million hectares of certified forests producing millions of tonnes of certified timber to the market place making PEFC the world's largest certification system. PEFC also has a number of non-voting ‘Extraordinary Members' including associations of forestry, paper, woodworkers, land-owners, timber trade wholesalers and retailers. PEFC National Governing Bodies comprise a variety of stakeholders within their jurisdictions including (inter alia) environmental non-governmental organisations (ENGOs), the academic community, consumer groups, standards bodies, governmental agencies, timber trade representatives, and others.

23.

For the following stakeholder groups, indicate whether their level of involvement with PEFC at the moment is insufficient/sufficient/excessive.

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Excessive

Sufficient

Insufficient

Not Sure/ Don't Know

Forest land owners; Forestry management; Forestry workers; Timber production companies; Timber production workers;
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14 24% 9 15% 3 5% 13 22% 1 2%

30 51% 32 53% 20 34% 30 50% 21 36%

9 15% 8 13% 21 36% 10 17% 14 24%

6 10% 11 18% 15 25% 7 12% 23 39%
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Timber product wholesalers; Timber product retailers; Trade associations; Labour associations; Financial services (e.g. trade finance); Consumer associations; Environmental NGOs; Indigenous peoples Academic community; Standards bodies Certification bodies; National government and quasi government bodies; International governmental and quasi governmental bodies (e.g. EU, WTO)

6 10% 4 7% 8 14% 2 4% 2 3% 2 3% 3 5% 1 2% 3 5% 6 10% 6 10% 5 9% 3 5%

20 33% 13 23% 25 42% 32 56% 15 26% 14 24% 19 32% 13 22% 30 50% 35 60% 34 59% 28 49% 21 37%

18 30% 25 45% 19 32% 12 21% 14 24% 29 50% 32 54% 33 55% 15 25% 3 5% 4 7% 10 18% 17 30%

16 27% 14 25% 7 12% 11 19% 27 47% 13 22% 5 8% 13 22% 12 20% 14 24% 14 24% 14 25% 16 28%

When thinking about each stakeholder group, are there any that you think should be formally or informally involved in the PEFC process?

25.

Formal governance options could include voting representation on the General Assembly, or a role contributing to the PEFC meta-standard. Informal governance options could include information dissemination for members, option to comment on issues under consideration by PEFC Members.

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Formal

Informal

None At All

Forest land owners; Forestry management; Forestry workers; Timber production companies; Timber production workers;

46 90% 43 84% 32 62% 40 77% 27 53%

5 10% 8 16% 20 38% 12 23% 22 43%

0 0% 0 0% 0 0% 0 0% 2 4%

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Timber product wholesalers; Timber product retailers; Trade associations; Financial services (e.g. trade finance); Consumer associations; Environmental NGOs; Academic community; Standards and certification bodies; National government and quasi government bodies; International governmental and quasi governmental bodies (e.g. EU, WTO)

27 53% 23 44% 25 49% 7 14% 26 49% 44 85% 20 39% 27 53% 18 34% 10 20%

23 45% 29 56% 24 47% 35 69% 27 51% 8 15% 29 57% 22 43% 26 49% 36 71%

1 2% 0 0% 2 4% 9 18% 0 0% 0 0% 2 4% 2 4% 9 17% 5 10%

Section 4 (of 6) - The Standards Puzzle
Forest certification schemes seeking to be endorsed by PEFC must be developed in an open and transparent way through a multi-stakeholder consensus-driven process. The forest certification schemes must be reviewed at least every 5 years to incorporate new experiences and scientific knowledge into the standards. National forest certification schemes that seek to be recognised by the PEFC Council and to have an access to the PEFC logo must fulfil all the PEFC requirements for forest certification schemes defined in the PEFC Council Technical Document and relevant Annexes. The assessment process includes a public consultation period with the assessment of schemes being undertaken by independent consultants, and informed by expert, peer review. They assess whether the scheme meets the guidelines and also the requirements of PEFC Council. Based on this independent assessment, all member countries and their stakeholders are in a position to participate in an informed vote on whether they mutually recognise the applicant scheme or not. This essentially creates a ‘meta-standard’ (an over-arching set of characteristics which, at a minimum, must be met by each member) which all full members must match, while retaining the flexibility for each national scheme to possess unique country-specific aspects as well.

Image PEFC forest certification and product labelling covers the following steps: • • • • Standards and rules developed in an open, transparent, and consensus-driven process; Forests certified by an independent third-party organisation with expert peer review; Wood traced from certified forests to the end consumer by chain-of-custody tracking; PEFC labelled products supporting an environmentally positive choice.

Complaints and appeals procedures are available for each separate process in the various bodies that contribute to the PEFC process.

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31.

What are the relative strengths and weaknesses of the following elements of the PEFC system:

Top number is the count of respondents selecting the option. Bottom % is percent of the total respondents selecting the option.

Very Strong

Strong

Adequate

Weak

Very Weak

Certification standards/schemes; Forest certification procedures; Chain-of-custody certification procedures; Accreditation of certification bodies; Panel of Experts; Independent assessment consultants; PEFC Logo on products; Mutual endorsement of standards; Complaints and appeals procedures;

15 26% 18 32% 18 32% 16 29% 1 2% 5 10% 3 5% 10 18% 3 6%

22 39% 24 42% 17 30% 22 40% 15 32% 24 46% 14 25% 19 34% 13 27%

14 25% 12 21% 15 27% 12 22% 25 53% 15 29% 15 27% 13 23% 26 54%

4 7% 2 4% 6 11% 3 5% 4 9% 7 13% 18 33% 9 16% 5 10%

2 4% 1 2% 0 0% 2 4% 2 4% 1 2% 5 9% 5 9% 1 2%

Section 5 (of 6) - External Perceptions and Effectiveness of PEFC

34.

Which of the following would better enhance PEFC’s reputation?

Engagement with a wider community of stakeholders through PEFC’s governance processes; Improvements to relevant elements of the PEFC system; Total

47

82%

10 57

18% 100%

36.

Which of the following would better enhance PEFC’s effectiveness?

Engagement with a wider community of stakeholders through PEFC’s governance processes; Improvements to
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24

44%

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relevant elements of the PEFC system; Total

30 54

56% 100%

Section 6 (of 6) - Other

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D. Governance Recommendations by Subject Area The International Oversight Panel received the following mandate from the PEFC Council:
In accordance with and subject to the PEFC’s Strategic Plan (including the vision, mission, purpose, core values & beliefs, principles and goals contained therein), the panel will update the PEFC Council, its rules and standards by: • improving external perceptions of PEFC’s governance; • making the PEFC organisation more effective; • ensuring that PEFC’s rules and standards are simple and easy to understand; implement and operate; • ensuring that PEFC robustly implements and continuously monitors its own requirements at all levels; • ensuring “buy-in” from PEFC’s existing stakeholders; • removing obstacles to dialogue with environmental non-government organisations (ENGO)s.

To that end, this Governance Review makes recommendations in each of the six subject areas of its mandate: External Perceptions of PEFC 6. Quantify PEFC 'Impact' 7. Commit to the 'High Road' 8. Apply the 'Plain-English' Principle 9. Promote an 'Management- Summary' Practice 10. Update Website for Accessibility 11. Invest in Marketing Capacity 12. Join Stakeholder Initiatives 13. PEFC International Conference on Forestry and the Environment 14. Develop Annual Internal Governance 'Check-Up' 15. Volunteer for One World Trust's 2009 Governance Review 19. Expand 'Extraordinary Members' into Forum 23. Launch Tropical Initiative 37. Give Stakeholder Forum Votes in General Assembly 39. Update PEFC Brand PEFC Effectiveness 1. Establish International Headquarters 2. Review Board By-Laws (Executive Committee) 4. Update Staff Position Descriptions 5. Delegate Operational Authority to Heads of Unit 9. Promote an 'Management- Summary' Practice 10. Update Website for Accessibility 12. Join Stakeholder Initiatives 14. Develop Annual Internal Governance 'Check-Up' 16. Strategically Update Board Model
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17. Focus Board Role 21. Expand Secretariat Capacity 22. Tighten Independent Consultant, Panel of Experts' Role 24. Add Fundraising Capacity 25. Increase Support to Members 28. Provide Capacity-Building Assistance 29. Post Position Descriptions for 'Seconded' Staff 33. Revise Engagement Between Board and International Headquarters 34. Review and Clarify Complaints and Appeals Procedure 35. Reduce Number of Board, General Assembly Meetings 37. Give Stakeholder Forum Votes in General Assembly PEFC’s Rules and Standards 5. Delegate Operational Authority to Heads of Unit 10. Update Website for Accessibility 12. Join Stakeholder Initiatives 18. Recruit Stakeholders into National Governing Bodies 19. Expand 'Extraordinary Members' into Forum 21. Expand Secretariat Capacity 22. Tighten Independent Consultant, Panel of Experts' Role 25. Increase Support to Members 27. Create 'Entry-Level' Tier or Endorsement 28. Provide Capacity-Building Assistance 31. Nominate Members of Panel of Experts from Forum 33. Revise Engagement Between Board and International Headquarters Implementation and Monitoring of Governance 3. Review Board By-Laws (Executive Committee) 9. Promote an 'Management- Summary' Practice 14. Develop Annual Internal Governance 'Check-Up' 15. Volunteer for One World Trust's 2009 Governance Review 16. Strategically Update Board Model 17. Focus Board Role 22. Tighten Independent Consultant, Panel of Experts' Role 30. Nominate Two Board Members from Forum 31. Nominate Members of Panel of Experts from Forum 32.Name Board Member to Chair Forum 33. Revise Engagement Between Board and International Headquarters 34. Review and Clarify Complaints and Appeals Procedure ‘Buy-In’ from PEFC’s Existing Stakeholders 2. Establish International Headquarters 3. Review Board By-Laws (Executive Committee) 4. Update Staff Position Descriptions 5. Delegate Operational Authority to Heads of Unit
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8. Apply the 'Plain-English' Principle 9. Promote an 'Management- Summary' Practice 10. Update Website for Accessibility 14. Develop Annual Internal Governance 'Check-Up' 15. Volunteer for One World Trust's 2009 Governance Review 16. Strategically Update Board Model 17. Focus Board Role 21. Expand Secretariat Capacity 22. Tighten Independent Consultant, Panel of Experts' Role 25. Increase Support to Members 27. Create 'Entry-Level' Endorsement Tier 29. Post Position Descriptions for 'Seconded' Staff 33. Revise Engagement Between Board and International Headquarters 34. Review and Clarify Complaints and Appeals Procedure 35. Reduce Number of Board, General Assembly Meetings 37. Grant Stakeholder Forum Votes Dialogue with Environmental NGOs 6. Quantify PEFC 'Impact' 8. Apply the 'Plain-English' Principle 10. Update Website for Accessibility 11. Invest in Marketing Capacity 12. Join Stakeholder Initiatives 13. PEFC International Conference on Forestry and the Environment 16. Strategically Update Board Model 18. Recruit Stakeholders into National Governing Bodies 19. Expand 'Extraordinary Members' into Forum 20. Add Stakeholder Forum 'Right of Agenda' 23. Launch Tropical Initiative 26. Sponsor Applied Research in Environmental Impact 27. Create 'Entry-Level' Membership Tier 30. Nominate Two Board Members from Forum 31. Nominate Members of Panel of Experts from Forum 32. Name Board Member to Chair Forum 33. Revise Engagement Between Board and International Headquarters 34. Review and Clarify Complaints and Appeals Procedure 36. Leverage Engagement with FSC 37. Grant Stakeholder Forum Votes 38. Lead Forestry Policy on Carbon

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E. PEFC Stakeholder Forum

NAME OF BODY: Stakeholder Forum Purpose: To expand the idea of “Extraordinary Members” into a forum, encouraging a broader range of stakeholders and granting specific rights and responsibilities within the PEFC’s governance process. International institutions can become members and contribute to the PEFC process in a number of ways, including membership fees, seconded staff, technical expertise and resources, joint projects, or organisational leadership. References ! ! PEFC Council Statutes (current statutes as adopted at the General Assembly 27 October 2006) Governance Review Report Recommendations 19, 20, 30, 31, 32, 37

Accountable To / Responsible For: ! ! The Stakeholder Forum will be part of the General Assembly of PEFC, the highest authority of PEFC, with rights and responsibilities as set out below The Stakeholder Forum has the right (as a collective body) to add policy and other issues to the agenda of the PEFC General Assembly in its periodic meetings, and to convey to the PEFC International Headquarters Requests for Review on specific issues or questions identified by its members The Stakeholder Forum has the right to nominate two members of the PEFC Board of Directors through the PEFC Nominating Committee The Stakeholder Forum has the right to nominate technical/standards advisors to the PEFC Panel of Experts. The Stakeholder Forum will acquire one vote per member up to a maximum of 50% (rounded down) of those of PEFC Council (e.g. if there are 35 PEFC Council members who have a total of 61 votes, the Stakeholder Forum will have a maximum of 30 votes. If there are 25 members of the Stakeholder Forum, they will have 25 votes.

! ! !

Membership: ! There will be an annual membership fee at rates to be determined by the Board. The Governance Review Panel envisages the fee per member organisation to be of the order of $2,000 to $10,000 per annum and that such fees should be designated funds for the purpose of providing Secretariat and similar facilitative services to the Stakeholder Forum. In exceptional circumstances, the Governance Review Panel suggests that, with the consent of the Board, PEFC be willing to accept services and/or expertise in kind in lieu of annual fees. ! Eligibility will apply to international organisations (defined as having substantial operations in more than one country) which have interests in PEFC’s activities, and as such are stakeholders. This includes all current extraordinary members, but extends eligibility to many international organisations that would not currently be eligible. Examples of the eligible types of international organisation include: o Trade associations, o Labour associations e.g. for forestry and/or timber production workers, o Environmental NGOs, o Timber production companies, o Governmental and/or quasi governmental bodies, o Standards bodies, o Certification and accreditation bodies, o Academic and/or scientific bodies, o Consumer associations.

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!

! !

Eligibility for membership of the Stakeholder Forum (based on the above criteria) should be determined by the Director-General. An organisation that applies for membership and is refused membership on the grounds of ineligibility should have the right of appeal to the Board. The Board must convene an appeals panel involving at least two members of the Panel of Experts to make recommendations on eligibility. This is a change to Article 3 (6). Members of the Stakeholder Forum should be subject to the same rules as PEFC Council Members regarding suspension or termination of membership for violations - see Article 3 (4) The Stakeholder Forum should be co-chaired (non-voting) by a member of the PEFC Board who is not one of the Board members proposed for nomination by the Stakeholder Forum

Frequency of Meetings: ! To be determined by the Stakeholder Forum, but the Governance Panel suggests one physical meeting per annum in addition to the Stakeholder Forum’s role as part of the General Assembly ! The Governance Panel encourages the Stakeholder Forum to use electronic media for discussion and debate between meetings Special Voting Rules: ! Voting within the Stakeholder Forum should be by simple majority voting. ! The Stakeholder Forum should decide for itself how its votes within the General Assembly are allocated. Options include: o Votes cast pro rated for the number of votes available to the Stakeholder Forum. (For example, if there are 40 members with an allocation of 30 votes and those 40 members vote 24 in favour and 16 against, the 30 votes would be cast 18 in favour and 12 against). o Stakeholder Forum’s vote on a simple majority basis, its entire quota of votes then deployed as a block vote. (In the above example, all 30 votes would be cast in favour.) o A mixture of the above, depending on the subject matter. For example, the Stakeholder Forum might wish its votes to be deployed pro rata on policy matters but to be deployed as a block vote on admissions Other Standing Orders: ! The Stakeholder Forum should be enabled to amend these and determine its own standing orders, subject to the agreement of the Board. ! The Board should only refer back a suggested change to the standing orders if the change is deemed to be unfair, excluding or inequitable towards one or more stakeholder groups Implementation issues and timescales: ! Will require amendments to PEFC Council Statutes to be effective ! An initial meeting of the Stakeholder Forum should take place within a few months of the Stakeholder Forum being launched ! The Stakeholder Forum’s nominees for the Board should be made at the next available opportunity – if one or two vacancies emerge on the Board before the Stakeholder Forum becomes active, ideally these vacancies should be retained for the initial Stakeholder Forum nominees ! Ideally the Stakeholder Forum should be activated and: o Participating in General Assembly in 2009; o Contributing nominees to the Board and the Panel of Experts by the end of 2009; o Voting at General Assembly by 2010.

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F. PEFC Organisational Structure (Current)

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Revised PEFC Organisational Bodies and Structure National Governing Bodies (NGBs) – As PEFC is a membership organisation, NGBs remain the ultimate source of authority. To accomplish their Mission, though, they have delegated certain authority to the Board of Directors and the International Headquarters to carry out and represent it internationally. General Assembly – The General Assembly is the decision-making body of the organisation, comprised of the PEFC Council and the Stakeholder Forum. Member-Schemes in the PEFC Council have between one and five votes. The Stakeholder Forum collectively will have votes equal to half the number (rounded down) of the total votes in the PEFC Council38. PEFC Council – Members of the Council represent Schemes in their country in the General Assembly. Stakeholder Forum – The Stakeholder Forum is made up of international organisations supportive of sustainable forest management, and engaged in improving and expanding PEFC work39. Board of Directors – The Board of Directors is drawn from internal and external sources as appropriate, and represents a mix functional capacities and representation of key constituencies within PEFC. Executive Committee – The Executive Committee is made up of the Chair and Vice-Chairs (2) of the Board, who are chosen from by Board members and who work closely with the Director-General guiding the organisation. Sub-Committees – The Board of Directors convene and lead standing or ad hoc Sub-Committees (e.g. on Finance and Audit, Fundraising, or Social Issues) that support the work of International Headquarters, and serve as venues for in-depth or topical discussion among members of the General Assembly. International Headquarters – Led by the Director-General, the staff of the International Headquarters implements the work of the PEFC, and has access to the specialised knowledge of Sub-Committees in a variety of areas. Independent Consultants – Qualified Independent Consultants are responsible for reviewing proposed new member schemes for compliance with the PEFC meta-standard. Panel of Experts – The Panel of Experts is a pool of consultants that reinforces the work of the Independent Consultants, and upon request by the DirectorGeneral or Board, supports the organisation by providing advice and

38 39

See ‘Appendix E – The Stakeholder Forum’ for specifics on voting rights See ‘Appendix E – The Stakeholder Forum

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interpretation on technical issues to the General Assembly, the International Headquarters.

PEFC National Governing Bodies (NGBs)

General Assembly

PEFC Council
(One to Five Votes per Member)

Stakeholder Forum
(Up to 50% of PEFC Council Votes)

PEFC Board of Directors PEFC Panel of Experts
(Nominated by PEFC Council and Stakeholder Forum) (Twelve Members, Two Nominated by Stakeholder Forum)

Sub-Committees
(Standing or Ad Hoc)

Executive Committee

PEFC Independent Consultants
(Qualified Pool of Technical Specialists)

PEFC DirectorGeneral
International Headquarters

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G. PEFC Assessment, Endorsement and Mutual Recognition Process (Current)

Scheme Applicant submits scheme with completed checklist on paper and in electronic form to the PEFC Council PEFCC Web Page For comments within target time of 60 days General Assembly Members for national comments within target time of 60 days comments

PEFCC Secretariat makes an invitation for Tenders (4 weeks)

PEFCC Board of Directors appoints Independent Consultant at next Board meeting and contract signed Independent Consultant starts scheme assessment.

mandatory optional

Report back to Board of Directors and applicant within a target time of 7 weeks.

Make revisions to scheme

Panel of Experts Peer review of the assessment report within a target time of 2 weeks

Board decides on the conformity of the scheme after receiving the report and if the Board decision is positive it recommends endorsement and mutual recognition to the General Assembly (GA) positive negative

Applicant informed of decision and can either:

Postal Ballot of GA with 4 weeks to respond

Appeal against the Board of Directors’ decision and have the scheme reconsidered at the next General Assembly.

If approved, scheme is endorsed and mutually recognised by members of the PEFC Council and official announcement is made on the PEFC Council Web Page

General Assembly (GA) members approve or reject recommendation by the Board of Directors via postal ballot

If rejected, the applicant is informed and can request to have scheme reconsidered at next General Assembly

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Revised PEFC Assessment, Endorsement and Mutual Recognition Process

Recommended Prospective member/scheme decides to apply for mutual recognition by PEFC Independent Assessment Independent Consultant and Panel of Experts review, comment, and make recommendation on proposed scheme Capacity Building PEFC International Headquarters may work with prospective member/ scheme to improve quality

Submission PEFC International Headquarters transmits application to external review for assessment and recommendation Transmits Rejection

Amendment

Transmits

Prospective member/scheme chooses to amend scheme or appeal to PEFC Board

Appeal Timeline (Illustrative) 1. 2. Prospective member may work with PEFC International Headquarters [Ongoing as necessary until submission] Upon submission, scheme transmitted for Independent Assessment (Consultant and Panel of Experts) for comment, review, and recommendation [100 Days] Decision of Independent Assessment transmitted to Members (on approval), back to prospective member (on rejection), or Board of Directors (on appeal of Assessment’s recommendation) Decision by Board of Directors (in special session) upon appeal of rejection or findings of Assessment (if applicable) [14 Days] General Assembly decides on endorsement by Internet ballot [14 Days] Transmits Appeal of Independent Assessment

PEFC Board of Directors reviews scheme, technical assessment and decides on status

Rejection

3.

Transmits Approval (including with conditions)

Approval

4.

5.

PEFC General Assembly decides on endorsement by Internet ballot Acceptance

Rejection

Proposed Scheme receives mutual endorsement

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H. ‘Evaluating Legitimacy and Quality of Forest Governance’ by Tim Cadman Tim Cadman, a Ph.D. candidate at the School of Government in the University of Tasmania is completing a dissertation on the evaluation of global forest governance systems, and presented some of his findings on governance and PEFC to the Panel during its third meeting. He generously agreed to the inclusion of the following analysis in this Review. Evaluating Legitimacy and Quality of Forest Governance Tim Cadman University of Tasmania tmcadman@utas.edu.au Summary This brief paper provides a theoretical approach to solving, the ‘problem’ of legitimacy, its relationship to quality of global (forest) governance, and how to determine, or evaluate, quality. Here, it is argued that legitimacy of global governance is understood institutionally in terms of structure, process and outcomes, and it is the degree of interaction between these elements, which determines quality of governance. Each of the governance arrangements linked to legitimacy in the previous sections (such as accountability and transparency) are located hierarchically within an assessment framework based upon principles, criteria and indictors (P, C & I). The actual relationship of these P, C & I to the structure and process of governance is explained diagrammatically. An evaluative matrix, based upon these P, C & I and related also to their institutional expression, is also presented. Discussion In the literature used in this paper, which spans approximately two decades, it is possible to discern an interest in coming to grips with the structures and processes, which underpin contemporary environmental governance. This emerges relatively early in the material, with a clear distinction made between governing, understood as a process of coordination, steering, influencing or ‘balancing’ social-political interactions, and governance, interpreted as the structure that emerges in a social-political system as an outcome of interaction.40 This idea re-emerges subsequently in terms of ‘governance as structure’, understood as the models utilised by various institutions (and repeating some of the debates surrounding typologies of governance), and ‘governance as process’, again referring to the idea of steering or coordinating.41

40 41

Kooiman, “Findings, Speculations and Recommendations”, pp. 258-259. Pierre and Peters, Governance, Politics and the State, pp. 14-24.

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Elaborating further on structure and process, it is also clear from the literature that the structures of contemporary governance are understood as being more participative in nature, in that they include more actors than the traditional state-bureaucracy model. Secondly, the processes through which decisions are made - recognising the broader participation of a range of actors - are more discursive in nature, requiring more deliberation than models oriented around command and control. The interaction between structure and process as a whole could be interpreted as comprising the ‘co’ arrangements, referred to earlier, and relates to participation within an institution’s structure and deliberation via its processes, which together describe the nature of collaboration in ‘new’ governance. It is this interaction, which results in substantive outcomes, such as the formulation of criteria, or setting of standards.42 Structure, process and substance are seen as interrelated components necessary for the solving of problems within contemporary governance.43 Together, they have been identified as the key determinants of ‘governability’, defined as “the total quality of a social-political system to govern itself within the context of broader systems of which it is a part”.44 However, even if quality of governance is conceived in terms of structure process and outcomes, it is nevertheless still necessary to address the problem of legitimacy in contemporary theory, since there is disagreement between global and state-centric theorists as to whence legitimacy is derived. Scholars with a more global perspective have previously viewed legitimacy in terms of both outputs (equated to efficiency, or effectiveness) and inputs (equated to democracy, or alternatively in more recent studies, interest representation, and accountability and transparency). Those studying public administration and public policy have tended to focus largely on output legitimacy, whilst those in the field of comparative politics have followed two schools of thought, depending on whether their focus is on democracy (in which case they favour input legitimacy) or efficiency, in which case they concentrate on output legitimacy.45 Whatever the scholarly perspective, the interrelationship between structure, process and outcomes is clear, and may be conveniently married to both input and output legitimacy, since input legitimacy concerns
42 43

Kooiman, “Findings, Speculations and Recommendations”, p. 260 Kooiman, “Social-Political Governance: Introduction” p. 5. See also Robert Falkner, “Private Environmental Governance and International Relations: Exploring the links”, Global Environmental Politics 3(2) (2003) pp. 72-87. For a discussion on the interplay between civil society, globalisation, forest management and governance, and which reflects much of the thinking contained in this introduction, see also Gordon M. Hickey and John L. Innes, “Monitoring suatinable forest management in different jurisdictions”, Environmental Monitoring and Assessment 108 (2005) pp. 241-260. For a detailed investigation of ‘new’ forest governance, see Peter Glück, Jeremy Rayner, Benjamin Cashore, Arun Agrawal, Steven Bernstein, Doris Capistrano, Karl Hogl, Bernd-Markus Liss, Connie McDermott, Jagmohan S. Maini, Tapani Oksanen, Pekka Ollonqvist, Helga Pülzl, Rwald Rametsteiner and Werner Pleschberger, “Changes in the Governance of Forest Resources”, in Forests in the Global Balance ed. G. Mery, R. Alfaro, M. Kaninnen, and M. Lobovikov (Helsinki: IUFRO, 2005), pp. 51-74, at pp. 55-64. 44 Kooiman, “Findings, Speculations and Recommendations”, p. 259. 45 Kjaer, Governance, p. 190.

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itself with the structures and processes of governance, whilst output legitimacy is more interested in outcomes. This interrelationship can be expressed figuratively (see Figure 1 below).
Figure 1 Conceptual model of contemporary global governance

INSTITUTION

Governance System Structure
(Participative)

Interaction
(Collaborative)

Process
(Deliberative)

Inputs

Outcomes
(Products: criteria, standards, policies, etc.)

Outputs

Legitimacy

(Determination of
governance quality)

Quality of governance can consequently be understood as the interrelationship between structure, process and outcomes, expressed in the observation that “the more ‘balanced’ these elements, the more ‘governable’ is the system”.46 This governability, or quality of governance, is therefore largely determined by the extent to which the interaction within the institution as a whole (understood in terms of both structure and process) leads to effective and substantive outcomes. In this case, being able to analyse the collaborative arrangements, which underpin the institution, plays a significant role in determining the total quality of the system under investigation. Evaluating governance quality Once the relationship between structure, process and outcomes is understood, there remain a number of problems confronting the development of a method for evaluating quality of governance. Firstly, although a wide range of scholars from both global and state-centric perspectives have commented at length on the various attributes of ‘good’ governance, they have generally not examined the nature of the relationship between those arrangements as a whole, since they have tended to focus on individual
46

Jan Kooiman, “Societal Governance” in Debating Governance, p. 159.

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attributes (the most notable being accountability), or groups of attributes according to particular areas of policy (such as forest certification), or institutional focus (such as the European Union or the World Bank). Secondly, the literature as it exists is contradictory as to how these governance arrangements are expressed institutionally. Lastly, and as a consequence of the first two problems, there is at present no simple matrix for evaluating governance quality. This section offers three analytical tools to address these problems. Firstly, for the purposes of understanding the nature of the relationship between the various governance arrangements already discussed in the review of governance literature above, a consistent hierarchical framework of principles, criteria and indicators (P, C & I) relating to governance quality is offered here.47 The intention behind the placement of these attributes within such a framework is to ensure that they are located at the right level, to allow for a top-down analysis of principles via criteria and subsequently to indicators. Consistency in this context relates to the correct location within the framework: it is important that parameters are placed at the appropriate level and do not overlap or duplicate those at another, and are linked back to the appropriate parameter at a higher level. Such P, C & I provide the means for reporting on the actual performance of each of the case studies explored subsequently. At the principle level, given the understanding of governance within the literature in terms of structure and process, and the argument advanced here that the total quality of a governance system relates to the interaction between structure, process and outcomes, these elements constitute the basis for a set of related principles. In this context, a principle is defined as a fundamental rule, which serves as a basis for reasoning, the objective of which reasoning is to ascertain the function of the total system in respect to explicit elements of governance. A principle can also express a certain perspective regarding a specific aspect of the system as it interacts, in this context, with the overall governance system.48 Figure 1.6 has identified ‘participation as structure’ and ‘deliberation as process’, both of which contribute to the substantive outcomes, or products, of the system. The analysis, which follows, consequently looks at the governance arrangements discussed above in terms of their relationship to either structure or process. Here the perspective, or attitude, adopted regarding participation as the fundamental structural aspect of governance is that it should be meaningful. This term is frequently associated with participation in much of the literature, and serves here as a normative, qualitative descriptor.49 The second principle, referring to the procedural aspects of governance, has been ascribed the term productive as its descriptor.50 In this context the principle is more than a statement about the democratic legitimacy of a process, as it refers both to the quality of deliberations, as they occur within the system, as well as the quality of the outcomes, or products, of those deliberations. This specific analytical approach is discussed further in the context of Figure 1.7 below.
47 48

This approach is adapted from Lammerts van Beuren and Blom, Hierarchical Framework, pp. 5-9. Lammerts van Beuren and Blom, Hierarchical Framework, p. 34. 49 This term first appears in the United Nations Declaration on the Right to Development, adopted by General Assembly resolution 41/128 of 4 December 1986 (Gaventa, John, “Making Rights Real: exploring citizenship, participation and accountability”, Journal of International Development Studies 33 (2) (2002) pp. 1-11). 50 See for example John Dryzek and Valerie Braithwaite, “On the Prospects for Democratic Deliberation: Values Analysis Applied to Australian Politics” Political Psychology 21 (2) (200), pp. 241-266.

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Criteria are parameters functioning at the next level below principles, and demonstrate compliance with them in relation to specific aspects or states of the system. They are intended to facilitate the assessment of principles that would otherwise be ideational and non-measurable.51 A criterion can also be described as “a category of conditions or processes” against which, a system can be assessed.52 Criteria are themselves not usually capable of being measured directly, however, but are formulated to provide a determination on the degree of compliance.53 They are consequently linked to indicators, which are hierarchically lower, and which represent quantitative or qualitative parameters, and do describe conditions indicative of the state of the governance system as they relate to the relevant criterion.54 Any discussion regarding the criteria associated with the principles of meaningful participation and productive deliberation therefore occurs simultaneously with their associated indicators. In this study, the structural principle of meaningful participation is demonstrated through two criteria, interest representation and organisational responsibility. In the discussion of the governance literature presented above interest representation has been linked to three elements of governance, which function on the indicator level: inclusiveness, demonstrating who participates in a governance system; equality, indicating the nature of the relationship between participants; and resources, referring to the economic, technical or institutional capacity of a participant to represent their interests within the system. The second criterion, organisational responsibility is comprised of indicators, accountability and transparency, which are usually treated together in the literature, and refer to the extent to which the behaviour of participating organisations can be both called to account both inside the institution and externally to the public at large, as well a being is visible, to other actors within the institution, and beyond. The procedural principle of productive deliberation is demonstrated through two criteria, decision-making and implementation. Three indicators are linked to decisionmaking: democracy, not referring a specific mode of democracy, but rather the extent to which a system can be deemed to be functioning democratically; agreement, referring to the method in which decisions are reached, such as voting, or consensus; and dispute settlement, indicating the system’s capacity manage conflict when there is no agreement, or there are challenges to decisions made. Three indicators are linked to implementation: behaviour change, used to determine whether the implementation of agreements, or substantive outcomes, results in changed behaviour regarding the problem, which the system was created to address (in the case of this study, forest management); problem solving, referring to the extent to which the system has solved the problem it was created to address (understood broadly in this study as unsustainable forest management); and durability, capturing the two related elements of adaptability and flexibility, as well as longevity. Table 1 below sets out the hierarchical relationship between these P, C & I.

51 52

Lammerts van Beuren and Blom, Hierarchical Framework, p. 20. The Montréal Process, Criteria and Indicators for the Conservation and Sustainable Management of Temperate and Boreal Forest Ecosystems, Second edition, December 1999, p. 5. 53 Lammerts van Beuren and Blom, Hierarchical Framework, pp. 22 and 34. 54 Lammerts van Beuren and Blom, Hierarchical Framework, p. 22.

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Table 1 Hierarchical framework for the assessment of governance quality
Principle “Meaningful participation” Criterion Interest representation Indicator Inclusiveness Equality Resources Organisational responsibility Accountability Transparency “Productive deliberation” Decision making Democracy Agreement Dispute settlement Implementation Behavioural change Problem solving Durability

It should be noted that the P, C & I method of evaluation suggested here, and derived from the forest management literature, is not without its critics in the field of environmental science. Indicators in particular have been labelled a “pathological corruption of the reductionist approach” resulting in a shadow world based on voodoo science.55 This has led to the conclusion that they are best used in a controlled manner to account for the critical dimensions of a system, and only in conjunction with other simultaneous views.56 With these observations in mind, the second tool, designed to located these P, C, & I within their institutional context, is presented here. This model accounts for those critical institutional dimensions (or arrangements) within the governance system to which the indicators and associated criteria and principles presented above have been hierarchically related. See Figure 1.2 below.

Roger Bradbury, “Are indicators yesterday’s news?” Institute of Environmental Studies (ed) Tracking progress: Linking Environment and Economy through Indicators and Accounting Systems. Conference Papers. 1996 Australian Academy of Science Fenner Conference on the Environment (Sydney: Institute of Environmental Studies, The University of New South Wales, 1996) reproduced at http://www.tjurunga.com/biography/roger-papers.html (accessed 15/09/07), p. 6. 56 http://www.tjurunga.com/biography/roger-papers.html, p. 7.
55

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Figure 1.2 Institutional model of governance quality

KEY Typeface indicates hierarchical relationship at the PRINCIPLE, CRITERION and INDICATOR levels.

It should be noted in this representation that implementation is to be conceived in terms of the interaction between structure and process, which have delivered the outcomes in need of implementation. This model therefore differs slightly from the hierarchical framework presented in Table 1.3. This incompatibility should be seen as having arisen out of the attempt to understand governance from an alternative, but simultaneous viewpoint, which takes a greater account of the complexity of the interactions within the system.57

http://www.tjurunga.com/biography/roger-papers.html, pp. 8-9 (in relation to the climate system, rather than a governance system).
57

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