Teak supply chains show concerning integrity risks

The Forest Stewardship Council (FSC) in collaboration with Assurance Services International (ASI) launched a transaction verification (TV) loop on FSC-certified teak in June 2022. The findings of the first phase of this TV loop indicate a high possibility of integrity risks in the certified teak supply chains. The analysis of transaction data submitted by the certificate holders included in the scope of this TV loop shows that non-certified timber may be entering the teak supply chains.

Last year, ASI collected transaction data for January to December 2021 from 511 certificate holders who have teak (Tectona grandis) in their certification scope. The TV loop traces the entire supply chain, starting from timber harvested by certified forest management units (FMUs) to the final products – such as flooring, veneer and outdoor furniture – sold to consumers.  

Some of the key findings of the data analysis include:

• A mapping exercise of the flow of teak from the forest to the consumer shows:
  • The majority of the certified forest management units (FMUs) harvesting and selling teak are located in Latin America and Indonesia.
  • The processing certificate holders are located in Vietnam, China, Costa Rica and Indonesia. 
  • European countries like Denmark, Germany, and Italy are the main buyers of the finished products considered in the scope of this TV loop, namely outdoor furniture, planks and wood for construction.
  • There are no FSC-certified FMUs selling teak from Myanmar, and none of the certificate holders within the scope of this TV loop reported any purchases of teak from Myanmar.
• Some of the potential integrity risks identified at this stage include:
  • Only about half of the FMUs participating in this TV loop declared their sales. Other FMUs in Latin America, Asia Pacific, and Africa declared no certified teak sales for the evaluated year. The preliminary results of the TV loop show that volume of teak purchased by the chain of custody certificate holders is greater than the volume of teak sold by FMUs. This potential volume mismatch poses an integrity risk to FSC’s certified supply chain of teak.
  • Several supply chains ending in Europe could not be traced back to the original forest where the timber was sourced from. Besides, certificate holders who do not have teak in their certificate scope have reportedly made transactions involving this species.

FSC is concerned with the preliminary findings of this TV loop and is working to obtain more information and proof of actual violations of FSC requirements. ASI will further investigate the potential volume mismatch that has been identified along with other high-risk supply chains as part of the second phase of this TV loop. Certificate holders are recommended to apply additional due diligence in selecting their teak suppliers and following FSC rules to ensure that the teak products they purchase are legitimate and within the FSC certificate scope of the seller.

FSC’s normative framework (Advice Note 18) has provisions for actions that FSC can take against companies making false claims. The identified false claims can result in FSC blocking the company from the FSC system for a specific duration. A blocked company can no longer make FSC claims on their products, nor can they use the FSC trademark. Throughout the duration of the blockage, they are not eligible to seek FSC certification.

Read more about false claims and blockage here.

For more information about the rationale behind launching this TV loop, click here to read FSC’s press release.