Protect people and share benefits Principles behind circular economy and how FSC contributes Visit main circularity page → A circular transition is not only about the environment and the economy – it must also be fair for people. A resilient circular economy depends on strong safeguards that protect workers, respect the rights of Indigenous Peoples, and ensure that local communities are included in value chains. As circular systems change how value is created, they also affect how value is shared. To be sustainable, these systems need to ensure that benefits – such as new business opportunities and improved resource efficiency – contribute to better livelihoods, decent working conditions, and long-term well-being. For FSC, this principle builds on a long-standing commitment to human rights, fair benefit-sharing, and responsible forest stewardship ensuring that a circular transition strengthens, rather than undermines social foundations. Core elements of this principle Ensure well-being of workers and communities Protect workers and communities affected by business activities and supply chains. This includes respecting fundamental labour rights, ensuring safe working conditions, and maintaining positive relationships with local communities. Indigenous Peoples’ rights, including Free, Prior and Informed Consent (FPIC), must be upheld. Ensure a fair and inclusive transition Design circular systems that reduce inequality and share benefits fairly across value chains and regions. This requires transparency, collaboration, and mechanisms that distribute value – not only risks – among stakeholders. FSC’s contribution today Advancing workers’ rights and community protectionsFSC upholds strong social safeguards across its Forest Management, Controlled Forest Management, and Chain of Custody standards. These requirements are mandatory and independently verified.A 2024 academic study comparing 12 certification systems found that FSC ranks highest overall in protecting Indigenous Peoples’ rights, labour rights, and procedural safeguards. This reflects FSC’s strong alignment with internationally recognised human rights principles. FSC’s labour requirements are based on the ILO’s Fundamental Principles and Rights at Work. This includes freedom of association, the elimination of forced and child labour, and non-discrimination. These requirements apply across the entire value chain. FSC standards also include requirements for occupational health and safety and specific safeguards for Indigenous Peoples’ rights, including FPIC.Together, these measures ensure that circular practices within FSC-certified systems are built on a strong and credible social foundation.Learn more by reading about FSCs standard Expanding FSC’s Contribution Proposed solution: A royalty system to reward circular value creation and ecosystem stewardshipTo support a fair and inclusive circular transition, the FSC Circularity Hub is exploring a voluntary royalty system that rewards circular participation and long-term forest and ecosystem stewardship. Forests provide many types of value – including carbon storage, biodiversity, water regulation, and livelihoods – but forest owners are typically only paid when timber is harvested. This creates an imbalance between the value forests provide and how that value is rewarded. In a circular economy, materials are used multiple times and generate value across several lifecycles. By enabling verified data to follow materials – such as origin, environmental performance, and social safeguards – FSC could help link value created downstream back to the forest.Much of this data already exists within FSC’s systems. The opportunity is to use it more actively to create new value streams. For example, companies facing documentation requirements could pay for access to verified data from the forest, with part of this data fee being channeled to the forest owners. This could create an additional income stream linked not only to harvesting, but to the continued circulation of responsibly sourced materials - rewarding healthy forest ecosystems over time. The concept is still in an early stage. FSC already has much of the required infrastructure, including traceability systems and verification processes, but further development is needed to ensure that the model is practical, voluntary, and globally accessible.If developed, such a system could strengthen incentives for responsible forest management and ensure that circular economy benefits also support those who manage and protect forests and the surrounding communities.Dive deeper in the FSC Circularity Hub Introduction paper.
