Corporate groups

Corporate groups shape how companies work – who owns what, who makes decisions, and who pulls the strings. FSC needs to understand these links to ensure that the companies we work with support responsible forestry across their entire business network. 

Activities FSC considers unacceptable 

One of FSC’s core documents – the Policy for Association (PfA) – outlines six unacceptable activities: 

^{* Note: The descriptions above are simplified for readability. They do not replace the full text given in the Policy for Association. For the complete and authoritative definitions of all unacceptable activities, please refer to the full policy.} 

FSC does not associate with companies involved in these activities, whether the violation occurs within the company itself or elsewhere in its broader corporate group. As part of this policy, FSC has to answer the following question. 

Defining a corporate group 

Currently FSC defines it as ‘the totality of legal entities to which an associated organization is affiliated in a corporate relationship in which either party controls the performance of the other.’ Control is the key concept here. FSC understands control as the power one company has to direct or influence another. This means control does not depend only on share ownership. While owning more than 50% of another company normally indicates control, FSC recognises that control can also exist with far smaller ownership stakes, or even with none at all. This shift – from an older ‘majority ownership’ model to a broader ‘nexus of control’ model – was a key change in Version 3 of the  PfA, which became effective in 2023.  

Now FSC evaluates control using a set of indicators that reflect how companies operate in the real world. These include whether: 

• there is a formal ownership structure
• companies publicly present themselves as part of the same group
• family members own or run the companies
• contracts or financial arrangements give one company leverage over another
• senior managers or board members overlap
• land or operations are managed centrally
• beneficial ownership is obscured through offshore or nominee structures
• companies share offices, resources, or key functions. 

How and when FSC uses corporate group concepts 

If FSC decides to disassociate from a corporate group for violations of the Policy for Association, we first determine which entities make up that company’s corporate group. Likewise, if a disassociated group would like to pursue remedy according to the FSC Remedy Framework, the corporate group must be determined to understand which entities are responsible for addressing social and environmental harm. 

FSC defines the relevant corporate group based on when the violation occurred. In some cases, this means that the older concepts from PfA Version 2 apply rather than the current Version 3.  

When PfA Version 3 is used, FSC uses a multifactor, case-by-case assessment to understand where real influence lies. This assessment is guided by FSC’s Standard Operating Procedure to Determine Corporate Group Control, which provides a structured approach for identifying control relationships.  

Challenges and limitations 

There are limits to what FSC can know at any given moment. Assessments depend on the evidence available at the time – corporate structures evolve, ownership changes, additional information may surface, and new risks may emerge. There are also limits to what FSC can review: corporate groups operate across many industries, while FSC’s mandate focuses on forests, forest operations, and forest products. 

At the same time, FSC is not an investigation firm. We mainly use information that companies provide, along with what is publicly available. To address gaps in information, FSC uses rebuttable presumptions: if there are allegations with credible evidence of control links, the entities are presumed to be part of the corporate group unless the company proves otherwise. 

In complex or high‑risk cases, FSC may engage external experts or law firms to analyse ownership structures or contractual relationships.  

These safeguards improve consistency and transparency, but they cannot eliminate uncertainty entirely. By taking the full picture into account, FSC keeps its standards strong and its commitment clear. If you become aware of activities that might violate the Policy for Association – whether by a certified company or any part of its wider corporate group – we encourage you to share that information with us.