Open Knowledge (FSC OK)

Voluntary certification is an option to support the sustainable environmental, economic and social development of enterprises operating in natural forests. FSC certification is the oldest and most preferred voluntary scheme for natural forest concessionaires in Indonesia. After three decades, the progress of certification in Indonesia is considered slow and still depends on financial support from foreign donors such as IDH. Consequently, this research has been undertaken to: 1) understand the problems faced by natural forest concessionaires prior to certification; 2) review the impacts of certification regarding costs, advantages, disadvantages and challenges; 3) understand the causes of certification withdrawal through a case in the concessionaires with suspended FSC certification status, namely KLIA and BIOS operating in natural mangrove forests. The impacts of certification at the concessionaire level have been analysed by examining public audit summaries paired with a survey of the concessionaire manager. This research was undertaken to focus on companies under IDH and TBI support in Indonesia that represent more than 50% of the natural forest enterprises certified by FSC in the country in 2018. Audit reports and the survey revealed that significant improvements in forest management have occurred as a result of certification, especially in environmental and health and safety features. These aspects were found to be the most frequently mentioned issues before certification in more than 80% of assessed logging companies. This research also found that the estimated cost of certification ranges from less than US$2 to US$7/ha. The estimated price premium and additional sales as a result of certification varied from 0% to 20% and 0% to 40% respectively. The disadvantages of certification were found to be the costs (preparation and audits) and the length of time taken in the process of certification. Meanwhile, raising staff awareness and post-certification costs remain as considerable challenges after the certificate has been granted. The case study found that certification might be more challenging in small business operations and non-integrated companies although the group scheme has been widely promoted to address the cost issue. Hence, small enterprises continue to depend on the assistance of external parties. Overall, FSC certification impacts on the social and environmental factors are considered prominent while monetary benefits are still low