Initial Insights from an Analysis of Birch Plywood Supply Chains

The preliminary results of the transaction verification (TV) loop on FSC-certified birch plywood reveal potential integrity risks due to uncertainties about the origin of the birch used in plywood with FSC-certified and FSC-controlled wood claims.

Key findings from the first phase of the TV loop are:

1. The geography of supply chains:

• Birch plywood is sourced from 18 countries, and the final products are channeled to 25 countries for consumption.
• Latvia has emerged as a major player in the supply chain, serving as a prominent source country. Many Latvian certificate holders act as intermediaries in the supply chain.
• Other countries where the FSC-certified birch plywood supply chains originate are Estonia and Finland.
• The top five consumer countries are Estonia, Latvia, Finland, Poland and Australia.
• Certificate holders in Türkiye and Kazakhstan purchased FSC-certified birch products. However, the Turkish certificate holders did not declare any international trade of certified products, and those in Kazakhstan did not report any sales to their certification bodies.
• Several Chinese certificate holders have been identified as trading partners by certificate holders participating in this TV loop, particularly certificate holders in Latvia, Australia and New Zealand.

2. Non-conforming actions:

• Some certificate holders purchased material with FSC Controlled Wood claims from certificate holders who are not authorized to sell timber with controlled wood claims. This indicates the risk of non-conforming timber entering the supply chain.
• Some certificate holders sold material with controlled wood claims to non-certified companies, which is not compliant with Clause 5.6 of FSC’s Chain of Custody Certification Standard (FSC-STD-40-004 (V3-1). The clause stipulates that: “The organization may only sell products with the ‘FSC Controlled Wood’ claim on sales and delivery documents if the products are raw or semi-finished and the customer is FSC-certified.”
• Some transactions were not compliant with FSC’s requirements as materials were sourced from suppliers who do not have birch plywood in their certification scope and nonetheless sold this product with FSC claims.

3. Potential risk of volume mismatches:

• The transaction records reveal potential volume mismatches, where the volume of raw material procured does not match the volume of products sold further down the supply chain. This suggests that non-certified material of unknown origin is entering the certified supply chains.
• Among the transactions analysed, a few upstream certificate holders have reported “zero sales” to their certification bodies, even though their clients further down the supply chain reported purchasing certified birch material from them.

Based on the above-mentioned findings, Assurance Services International (ASI) has identified high-risk supply chain clusters for the investigation phase of this TV loop. ASI will also analyse the transaction data of those certificate holders who did not participate in the first phase of this TV loop but were identified as trading partners by participating certificate holders. This investigation is accompanied and enhanced by another TV loop that started in May 2024 – the Eurasia wood panels TV loop.

Background:

The Birch Plywood Transaction Verification (TV) loop was launched in 2023 by Assurance Services International (ASI), with FSC’s support, to identify the risk of non-certified birch, including Russian birch, entering the FSC-certified plywood supply chains through alternative routes, such as alleged middlemen countries like Latvia, Türkiye, Kazakhstan, and China.

As a part of this TV loop, ASI collected data from 78 Chain of Custody certificate holders in Latvia, Kazakhstan, Türkiye, Japan, Australia, and New Zealand. The product type included in this TV loop’s scope is Plywood and the species covered are Betula pendula, Betula pubescens, and Betula spp. The data was collected for all transactions with the invoice date from 1 July 2022 to 30 June 2023.

For more information about this TV loop, read the news article about the Launch of birch plywood transaction verification loop | fsc.org (September 12, 2023)

For more information about ASI’s assessments in FSC-certified companies in Kazakhstan, click here.