Preliminary results of transaction verification loop in Vietnam

The preliminary results of the transaction verification (TV) loop on Vietnamese wood supply chains indicate that there are some potential discrepancies in transactions reported by the certificate holders included in this TV loop. Several suppliers declared fewer sales than the purchases reported by their customers.

In May 2023, FSC and its assurance partner – Assurance Services International (ASI) – launched this TV loop to identify the volumes and species of certified wood harvested in Vietnam. Through this TV loop, FSC and ASI also aim to trace supply chains of raw materials used for wood pellets production. The original scope of the TV loop included 424 certificate holders – 368 chain of custody and 56 forest management certificates; they were requested to submit their transaction data for 2022. However, 17 certificate holders did not respond, and their certificates were suspended by their respective certification bodies, some of which were subsequently terminated. 

The first phase of the TV loop – data collection and analysis – reveal the following trends:

• 98% of certified wood harvested in Vietnam was Acacia, while Eucalyptus was mostly imported. These are the two main timber species used in the production of FSC-certified wood pellets.
• Certified forest management units across the country are actively involved in growing and harvesting various timber species, including Pinus, Tectona, Styrax, and Magnolia.
• Timber species like Quercus, Tectona, and Betula are imported into Vietnam for further processing. This indicates that Vietnamese certificate holders actively engage with suppliers from diverse geographic regions, including North America, Europe and other Asian countries, demonstrating the country’s role as a key player in the international timber trade.
• A large number of chain of custody certificate holders procure timber from controlled sources. Certificate holders also make FSC controlled wood claims on biomass sector products, which are exported.
• Some certificate holders sold products with FSC controlled wood claims to non-certified companies, which is against the normative provisions related to FSC controlled wood (FSC-STD-40-004-V1, clause 5.6).
• The volume of FSC controlled wood traded in the supply chains surpasses the volume of timber sourced from FSC-certified forests.

As revealed by the data gathered in this TV loop, Vietnamese certificate holders, particularly in the biomass sector, demonstrate a heavy dependence on timber from controlled sources. Controlled wood is soured from uncertified forests, but certificate holders have to ensure that the wood is procured in accordance with FSC’s requirements. Consequently, with FSC controlled wood claims becoming more prevalent in the country, fewer forest management companies are choosing to undergo the rigorous process of certifying their forests.

Even though controlled wood supports responsible forestry, FSC is working to promote forest management certification amongst smallholders and community forests in Vietnam. This initiative is a part of FSC’s drive to increase forest management certification and encouraging certified supply chains to choose wood from certified forests over controlled sources.