Combating Illegal Logging and Enhancing Biodiversity in Japan’s Paper Industry

Feburuary29,2016

University of Kyoto

Kiyoshi KamikawaJapan Paper Association

1

• In July 2005, at a G8 Summit held in Gleneagles, the U.K., developed countries around the world formed an agreement to create measures that address the problem of illegal logging.

• Following this agreement, the Government of Japan amended criteria concerning wood-based products under the Green Procurement Law.

• The amendment went into effect after April 2006, making the Law require timber suppliers of government institutions to supply timber that has been verified its legality.

2

• The EU also created “Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market” in 2010.

• Following the establishment of this Regulation, it is prohibited to sell illegally-harvested wood or forest products made from such wood within the EU from March 2013.

• In addition, Australia has passed “Illegal Logging Prohibition Bill”, very similar to EU Timber Regulation, at the national Parliament in 2012 and has come into effect from 2014.

3

• Furthermore, the United States has amended the Lacey Act in 2008, as part of its anti-illegal logging measures. Following the amendment, exporters of wood products, including paper, now have to make a declaration with regard to a country of origin where wood is harvested and tree species, as well as product name, price and quantity (However, the obligation of the declaration is not applicable to paper pulp at the point of writing this document).

4

Combating Illegal Logging

• Japan Paper Association (JPA) pledges to combat illegal logging, one of the major causes of deforestation worldwide.

• JPA set up the code of actions against illegal logging in 2006. (100% not illegal confirmed)

• Japanese paper companies set up their own codes of procurement and collect traceability reports from all suppliers.

• In addition, JAP audits Japanese paper companies’ actions of confirming legality.

5

• Prior to this, Japan Paper Association developed “The Code of Action for” the Japan Paper Association Regarding the Illegal Logging Problem” in March 2006.

• The Code of Action is designed clarify theAssociation’s commitment to have the entire industry commit to the elimination of illegal logging.

• The Association also amended “The Voluntary Action Plan Regarding the Environment” in March 2007, incorporating the anti-illegal logging measures as part of the Voluntary Action Plan.

• In 2014, the Voluntary Action Plan was terminated and “ The Action Plan Regarding the Environment” has been newly set up, also incorporating the anti-illegal logging measures as part of it

6

• The Forestry Agency issued the Guidelines , under the green procurement law, concerning verification methods of anti-illegal logging measures, which specifies the following three verification methods:

(1) “Verification method via forest certification system”

(2) “Verification method by company under the authorization of associations for forest owners, forestry or wood industries”

(3) “Verification method by original measure of each company”

7

Verification method by company under the authorization of associations for forest owners, forestry or wood industries (2014)

Categories Domestic/Import

Total Volume(1,000m3)

Volume verified as legal (1,000m3)

% Authorized companies

Round wood(production)

Domestic 12,100 8,578 71 1,910

Round wood(distribution)

Domestic 15,155 10,231 68 532

Forest products(production)

Domestic 25,286 14,527 57 2,957

Forest products(distribution)

Domestic 25,215 9,991 40 3,145

Others Domestic 264 170 64 14

Round wood Import 2,042 1,223 60 3

Forest products Import 6,415 993 15 338

• The paper industry has adopted method (3) above (“Verification method by original measure of each company”), and since April 2006, member companies of the Japan Paper Association have been implementing their own measures for tackling illegal logging issues.

• For the implementation of verification method, some companies are using method (1) or (2) above at the same time ((1) “Verification method via a forest certification system”; (2) “Verification method by company under the authorization of associations for forest owners, forestry or wood industry”).

9

Legality Verification System of JPA

62

Loggers

Imp

ort

Do

mestic

Supplier

Associations(Code of Action)

Loggers

Paper Companies

Chipping Mills

Users

Japan Paper Association(Code of Action)

Wholesalers

Audit

Authorization

Certificate

Traceability Report

• Furthermore, since 2007, the paper industry has been stepping up its effort to address the illegal logging problem by implementing the “The Monitoring Operation for Anti-Illegal Logging Measures”.

• This operation includes monitoring by the Japan Paper Association, for which guidance, advice and auditing are provided by a third-party committee consisting of academic experts, consumer groups, those involved with auditing corporations, and other similar groups.

11

Auditing Committee Members

Shin NAGATA Professor, Graduate School of Tokyo

University

Akihiro OHNUMA All Japan Stationery Association

Kazuya KOUJITANI Green Purchasing Network

Satoshi TACHIBANA Associate Professor, Graduate

School of Tsukuba University

Kyoko NOMURA Price Waterhouse Coopers

12

• In February 2009, criteria concerning photocopy papers under the Green Procurement Law were amended.

• Prior to the amendment, the paper for public procurement had to come from 100% used paper, but as a result of this amendment, it can now include virgin pulp up to 30% provided that such pulp originates from wood from thinning operation, or certified wood.

• Other types of wood that was produced in a sustainable manner is also allowable.

• For these, paper companies decided to use “The Monitoring Operation for Anti-Illegal Logging Measures” mentioned above, whilst also confirming environmental and social superiority of relevant forests through the implementation of procurement policies or the production of traceability reports, in order to meet the criteria under the Law.

13

Future Development of JPA’s Anti-illegal Logging Measures • 10 years have passed since JPA has started its

own anti-illegal logging measures.• Besides, the law for the promotion of legal

wood procurement ( Japan’s version of anti-illegal logging law) would be enacted soon before Ise-Shima Summit held in Japan coming May.

• JPA has now been considering the improvement of its anti-illegal logging measures, introducing “Due Diligence” system, so as to satisfy the requirements of EU Timber Regulation, Lacey Act and Australian anti-illegal logging law.

14

Paper and Paperboard Production of Japan

・Japan is the third largest paper and paperboard producing country in the world.

・Paper and paperboard production of Japan dropped by minus 14.2% from 30,625 thousand tons in 2008, to 26,268 thousand tons in 2009 due to Lehman shock.

・It was back to the level of a quarter of century (26 years) ago (1988).

・Since then, the level of paper and paperboard production has been floundering around 26 million tons ( 26,241 thousand tons in 2014).

・ The production of paper continues to be decreasing due to IT revolution (15,118 thousand tons in 2014).

・ On the other hand, the production of paperboard has been rather stable (11,360 thousand tons ), in proportion to GDP.

15

16

0 20000 40000 60000 80000 100000 120000

分類 1

China USA Japan Germany Sweden S.Korea Canada Finland Brazil Indonesia

World Paper & Paperboard Production in 2014

USA

Germany

S,Korea

Canada

Finnland

Brazil

Japan

China

Sweden

Indonesia

Source: RISI

Trends in paper & paperboard production

28,518

29,659 30,012

31,014

29,886 30,631

31,828 30,717

30,686 30,457

30,892 30,951 31,106 31,266

30,627

26,268

27,36326,579

25,…

26,24126,478

16,602 17,466

17,767 18,267

17,855

18,393 19,037

18,385 18,528

18,396

18,788 18,900 19,062 19,192

18,828

15,831

16,38715,430

15,067

15,182

15,…

11,916 12,193

12,245 12,747

12,031 12,238

12,791 12,332 12,158 12,061

12,103 12,051 12,044

12,074 11,800

10,436

10,97611,149

10,890

11,05911,360

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

32,000

‘94 ‘95 ‘96 ‘97 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 10 11 12 13 14

17

(×1000 metric ton)

Source : Japan Paper association

Paper&Paperboard Production

Paper Production

Paperboard Production

Paper and paperboard production by grades

2008 2009 2014

Production ’08/’07 Production ’09/’08 Production ’09~’14

Newsprint paper 3,680 96.8 3,455 93.9 3,134 －1.9

Printing and writing paper 11,501 98.6 9,120 79.3 8,491 －1.4

Packaging paper 1,010 101.6 786 77.8 905 ＋2.9

Sanitary paper 1,805 102.0 1,776 98.4 1,766 －0.1

Other paper 831 86.4 695 83.6 821 ＋3.4

Paper total 18.828 98.1 15,831 84.1 15,118 －0.9

Container board 9,219 97.8 8,213 89.1 9,096 ＋2.1

Boxboard 1,879 101.0 1,637 90.0 1,593 －0.5

Other paperboard 762 89.7 586 76.9 672 ＋2.7

Paperboard total 11,800 97.7 10,436 88.4 11,360 ＋1.7

Total 30,627 98.0 26,268 85.8 26,478 ＋0.2

18

(1000 metric ton : % )

Source : PRPC

Pulp from

Planted

Wood

19.7%

Pulp from

Sawmill

Residue…

Pulp from

Natural

Wood

3.5%

Imported

Market Pulp

6.2%

Others

0.1%

Raw Materials Contents（2013）

Recovered

Paper63.9%

19

Consumption of Recovered Paper

・ Japanese paper industry has achieved the highest level of recovered paper utilization rate in the world.

• Utilization rate in 2014 is 63.9% (paper 40.3%,paperboard 93.2%)

• Consumption of recovered paper is 17,224 thousand tons in 2014.

• Japan Paper Association (JPA) has set up the utilization rate target of 64% by the year 2015 in Environmental Action Plan with great efforts and almost achieved that target .

• JPA has been reviewing the existing target and now in the process of setting up the new target for the year 2020.

20

Recovery rate of Recovered Paper

・Recovery rate of recovered paper is also at the highest level of 80.8% in 2014, which is due to the effectively sorted collection system deeply rooted in the Japanese society.

・Collection of recovered paper is 21,751 thousand tons in 2014. We have a large amount of surplus of recovered paper and export a lot to China.

21

Recovery rate & Utilization rate of recovered paper

51.7 51.551.3

53.0

55.2

55.7

57.7

61.5

65.466.1

68.5

71.1

72.4 74.5 75.1

79.7

78.2

77.9

79.9

(53.3)(53.4)(53.6)(54.0)

(54.9)

(56.1)

(57.0)

(58.0)(59.6)

(60.2)(60.4)(60.3) (60.6)

(61.4)(61.9)

(63.1)

(63.0)

(63.7)

63.9

(6…

48

50

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

‘94 ‘95 ‘96 ‘97 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 '10 11 12 13 14

22

(%)

Source：PRPC

Recovery rate

Utilization rate

（62.5)

Woodchip Consumption of Japan

・Woodchip consumption of Japan dropped by minus 20% from 19,086 thousand tons in 2008 to 15,294 thousand tons in 2009 due to Lehman shock.（consumption of imported woodchips dropped by minus 23.6% to 897 thousand tons）

・Woodchip consumption of Japan recovered by 11% to 16,992 thousand tons in 2010.

・ It went down again to 15,593 thousand tons in 2012.

・ But it has increased a little by two consecutive years to 16,489 thousand tons in 2014, even though it is still at a rather low level.

23

Consumption of Woodchip

0

5000

10000

15000

20000

25000

05 06 07 08 09 10 11 12 13 14

Import Hardwood

Import Softwood

Domestic Hardwood

Domestic Softwood

1628015593

15967

24

(thousand BDT)

Source: Japan Paper Association

19187 19229 1936319086

15294

1699216489

Pulpwood Market Situation ( 2014 )

25

（unit：1000BDT、％ the ratio over the previous

year）

items consumptionsupply

domestic import total

％ ％ ％ ％

pulpwood total 16,488 103.3 4,909 97.0 11,409 107.5 16,318 104.1

softwood log 127 94.0 125 99.1 125 99.1

hardwood log 21 94.6 21 95.5 21. 95.5

softwood chip 5,093 103.6 3,427 98.1 1,651 121.7 5,078 104.7

hardwood chip 11,247 103.2 1,336 93.9 9,758 105.5 11,094 103.9

（reference）

consumption softwood ratio over the previous year ： 103.3％

hardwood ratio over the previous year ： 103.2％

supplysoftwood ratio ：31.9％

hardwood ratio ：68.1％

import ratio ： 69.9％ ( softwood ： 31.7％ hardwood ：87.8％ )

Source：Japan Paper Association

26

Japan,3,425 Japan, 3,389 Japan,3,427

Australia, 732

USA, 649

USA, 661 USA, 683

Australia, 549 Australa, 502

NZ, 291 NZ, 307 NZ, 315

OthersOthers Others

Japan, 1,531 Japan, 1,422 Japan, 1,336

Australia, 3,512

Australa, 2,581

Australia, 1,812

Chile, 2,345

Chile, 2,572

Chile, 2,054

South Africa, 1,410

Vietnam, 1,066

Vietnam, 1,620

Vietnam, 2,418

South Africa, 1,415

South Africa, 1,112

Thailand, 613 Thailand, 766

Thailand, 834

Brazil, 582 Brazil, 573

Brazil, 810

Others Others

8,000

6,000

4,000

2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000Thousand BDT

2010 2011 2014

So

ftwo

od

Ha

rdw

oo

d

Others

Hardwood Total 11,152Hardwood Total 11,312 Hardwood Total 11,094

Softwood Total 5,412 Softwood Total 5,204 Softwood Total 5,078

Trend of Self-Sufficiency Rate of Woodchip

40

45

50

55

60

65

70

75

200020012002200320042005200620072008200920102011201220132014

Domestic Woodchip(softwood)

（％）

0

5

10

15

20

25

30

35

40

200020012002200320042005200620072008200920102011201220132014

Domestic Woodchip(hardwood)

(%)

19

Source; Ministry of Economy, Trade and Industry

Softwood Hardwood

Imports of Woodchip by origin(softwood)

・ The import from U.S. was 684 thousand tons in 2008, and sharply dropped to 369 thousand tons in 2009 , but bounced back to 663 thousand tons in 2010.

・ It continued to decrease to 497 thousand tons in 2013 but bounced back to 660 thousand tons (39.1%) in 2014.

・ The import from Australia was 1,087 thousand tons in 2008, and dropped to 598 thousand tons in 2009, but recovered to 731 thousand tons in 2010.

・ It dropped again to 546 thousand tons in 2011, and decreased further to 460 thousand tons in 2012,but bounced back a little to 502 thousand tons (30.2%) in 2014.

.28

Trend of Woodchip Imports by origin(softwood)

0

200

400

600

800

1000

1200

1400

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US Canada Russia Australia NZ Fiji Chile Brazil

US

Canada

29

(thousand tons)

Source: Ministry of Finance

Australia

NZ

Fiji

Woodchip Imports by Origin (softwood)

<2009>

Ａｕｓｔｒａｌｉａ

ＵＳ

ＮＺ

Ｃａｎａｄａ

Ｆｉｊｉ

Ｏｔｈｅｒｓ

<2013>

Australia

US

NZ

Canada

Fiji

Others

2014

30

42.414.6

9.5

5.1

30.29.8

Source: Ministry of Finance

39.7

7.9

9.6

2009

Woodchip Imports by Origin (hardwood)

• The import from Chili was 2.350 million tons in 2008 and dropped a little to 2.238 million tons in 2009 and up again to 2.377 million tons in 2010.

• It went up to 2.590 million tons ( 27.0%) as No.1 in 2012, but went down to 2,033 million tons (20.3%) as No.2 in 2014

• The import from Vietnam was 1.071 million tons in 2008 and dropped to 0.809 million tons in 2009 and up to 1.064 million tons in 2010.

• It jumped up to 2,498 million tons ( 25.0%) as No.1 in 2014.

• The import from Australia was 4.464 million tons in 2008 and dropped to 3.148 million tons in 2009 but could not recovered to 3.591 million tons in 2010.

• It continue to decrease to 1,821 million tons ( 18.2%) as No.3 in 2014.

31

Trend of Woodchip Imports by Origin (hardwood)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US Australia Indonesia Thailand Vietnam Chile Brazil S.Africa

32

(thousand tons

Source: Ministry of Finance

Australia

S.Africa

Chile Vietnam

Woodchip Imports by Origin (hardwood)

<2009>

Australia

Chili

South Africa

Vietnam

Brazil

Thai

Others

<2013>

Australia

Chili

SouthAfricaVietnam

Brazil

Thai

Others

33

35.4

25.2

Source: Ministry of Finance

16.1

8.9

6.4

4.1

11.1

8.2

8.73.9

18.2

20.325.0

8.4

20142009

JPA’s Code of Action for Conserving Biodiversity

• Japan Paper Association (JPA) has set up JPA’s Code of Action for Conserving Biodiversity in 2014.

• In addition to setting up the code, JPA has done the monitoring survey of what member companies have actually done for conserving biodiversity in 2015 and will continue to do so annually in order to improve the performance of conserving biodiversity for each member company.

34

JPA’s Code of Action for Conserving Biodiversity

・Corporate Governance

・Sustainable Forest Management

・Responsible procurement

・Corporate Social Responsibility

・Social Cooperation

35

JPA’s Initiatives for SFM

JPA’s Environmental Action Plan

(established in 2012)

・We have committed to promote SFM thorough forest certification

・We have target to expand forest plantation area owned or managed by JPA members at home and abroad to 800 thousand ha by FY2030 to ensure a stable wood supply, as well as to increase forest carbon sinks that help prevent global warming.

36

To read full text of the Action Plan, please visit http://www.jpa.gr.jp/en/

Forest Plantation by JPA Members

In its Environmental Action Plan, JPA sets the target of expanding

the plantation area at home and abroad to 800 thousand ha by

FY 2030.

37

275

406426

463491 506

537

605 607647 652

690 690 677

626

800

200

300

400

500

600

700

800

900

90 00 01 02 03 04 05 06 07 08 09 10 11 12 13 30

Forest Plantation Area

(1,000 ha)

(1,000 ha)

Promotion of Plantations Overseas

• JPA has set up the target of expanding the area of plantations owned or managed by Japanese paper companies to 0.8million ha in Japan and overseas by FY2030 under Environmental Action Plan .

• We have already established 0.479million ha of plantations overseas (34projects) In 10 countries In 2013.

• The total area of Plantation including domestic ones (0.147 million ha) was 0.626 million ha.

• The area of plantation overseas has decreased two consecutive years (in 2012 & 2013) due to the decreasing demand for woodchip and climate changes caused by global warming (fewer rain in Australia).

• Main planting species are Eucalyptus spp. and Acacia spp. with the rotation of 7~10 years.

38

Overseas Forest Plantations by the Japanese Paper Industry

39

Cambodia

400ha

Source: Japan Paper Association

Total: 479,000ha (as of the end of 2014)

Brief History of SGEC Certification Scheme

1.SGEC certification scheme established in 2003Established as a forest certification scheme, consists of

74 members including forestry, forest industries, environmental NGOs, business societies, academics and so on. 2.Got a membership of PEFC as NGB in 2014SGEC has accepted as a member of PEFC and has

become the National Governing Body of Japan since 29th

July 2014.3.Application for mutual recognition with PEFC in 2015Passing through necessary procedures, SGEC’s

application for mutual recognition with PEFC was submitted to PEFC 27th March 2015. Waiting for the final decision of Board of Members of

PEFC in coming June 2016.

40

・SGEC has established principles, indicators and guidelines of FM certification, in a fair and proper way, based on Montreal Process.

・ SGEC has also established guidelines of CoCcertification in accordance with those of PEFC.

・At the same time, 3 certification bodies have already been engaged in certifying forests and forest products under SGEC scheme.

41

・ Since then, SGEC has remarkably expanded the coverage of forest area certified by FM certification (1,310,663 ha in 2016, 5% of Japan’s total forest areas) and the numbers of entities certified by CoC certification (351 in 2016), strongly supported by small-scaled forest owners and forest industries in Japan.・This achievement of SGEC apparently surpasses that of

FSC in Japan. FSC has 393,243 ha of forest areas certified by FM certification（2016） and 1,050 entities certified by CoC certification（2016）.・But, FSC has a better recognition as forest certification among forest products users and consumers, because environmental NGOs such as WWF has strongly supported and campaigned. ・As SGEC has not been endorsed by PEFC (SGEC has

applied for the endorsement of PEFC and would be done in coming June.) so far, PEFC has none of forest areas certified by PEFC, but has 190 entities certified by CoCcertification in 2016.

42

Forest Certification in Japan

CertificationScheme

FM Certification(ha)

CoC Certification

SGEC 1,310,663 351

FSC 393,243 1,050

PEFC --- 190

43(February 2016)

Forest Certification in Paper Industry (2013)

• Japanese paper companies have 0.64million ha of their own forests certified by forest certification schemes such as FSC, PEFC and SGEC (independent, only in Japan) .

• Besides, 22.2% of woodchips consumed by Japanese paper companies is certified by CoC.

• Japanese paper companies choose each forest certification scheme according to its acceptance in each region.

44

Forest Certification Area owned by JPA Members

45Source：Japan Paper Association

The amount of forest-certified woodchips (2013)consumed by Japanese Paper Companies

Softwood hardwood total

Ｄｏｍｅｓｔｉｃ

245 5 250

Ｉｍｐｏｒｔ

616 2,610 3,226

Ｔｏｔａｌ（ｆｏｒｅｓｔｃｅｒｔｉｆｉｃａｔｉｏｎｒａｔｅ）

861

(17.3%)

2,615

(24.4%)

3,476

(22.2%)

46

Source：Japan Paper Association

Thank you for you kind attention!

47