False Claims in Supply Chains

Businesses, consumers, and many organizations worldwide depend on the integrity of the FSC label. Fraudulent claims and non-certified materials found in FSC-certified supply chains therefore represent a breach of trust that can significantly overshadow the positive achievements of conforming organizations. FSC leads initiatives around the globe to identify, prevent and eliminate false claims across certified supply chains.

A false claim is when a certificate holder deliberately or unintentionally sells a product as ‘FSC certified’ when it is not the case.

FSC’s measures to preserve the integrity of certified supply chains

FSC imposes several measures to reduce false claims in certified supply chains:

• Independence and impartiality: As transparency is fundamental for FSC, independent certification bodies manage and regularly audit FSC certificates after being accredited by Assurance Services International (ASI), FSC’s assurance partner. FSC is the only global forest certification system with an integrated accreditation programme verifying its certification bodies.
• Investigations and transaction verifications: Certified organizations want verification that certified materials received from their trading partners conform with FSC standards and can be tracked all the way back to the source without any suspicious intrusion. FSC therefore works closely with ASI and certification bodies to conduct investigations into specific product or high-risk supply chains. Transaction verifications are used in FSC’s supply chain investigations to compare and verify commercial transactions related to a specific type of product, group or region over a given time period. Their goal is to verify that claims made by FSC certificate holders are accurate and match claims of their trading partners.
• New technologies: FSC is also pioneering new ways of verifying claims with the help of new technologies such as blockchain and wood identification technologies. As paper-based verification systems make it simpler to make fraudulent claims, for instance by falsifying documentation, digital solutions can help make these potential false claims more complicated to forge.
  - Blockchain is a record-keeping technology that registers transactions into a digital record book that cannot be changed. It allows anyone with access to the blockchain to verify and audit transactions independently, even if that person is unknown to the other participating parties. For instance, organizations that normally know their direct suppliers, but would not have had access to their trading partners’ suppliers and their records before Blockchain came into action.
  - Wood identification technologies enable scientists to trace the timber species and their harvest location. FSC uses such techniques to confirm the provenance of timber for which potential fraud claims have been identified. FSC is a member of a consortium of organizations called WorldForestID, an initiative developing an open-source geo-referenced database of wood species from all around the world, collecting all sorts of wood to make wood identification more efficient.

Consequences of identified false claims

Any false claim related to FSC can lead to immediate suspension or termination of the certificate for FSC-certified companies. FSC may decide to block such companies from the certification system, which includes the revocation or suspension of their trademark license agreements. A blocked company cannot seek recertification until the period of blockage is completed.

If a blocked company wishes to become eligible for recertification before the period of blockage finishes, FSC evaluates the integrity and/or reputational risk posed by the organization and decides whether to unblock the organization or not.

Companies proven guilty of false claims have to fulfill certain requirements that demonstrate that they have taken corrective, preventive and remedial (CPR) measures to address the false claims. In addition to it they must also pay a penalty, which is determined according to specific provisions available in FSC’s normative documents.