SHAPING THE FUTURE

Tom van Loon, Head of Sustainability

1 EUROPE IHC Headquarters, sales and trading (Switzerland)

IHC Warehouse and sales, Belgium

2 CENTRAL AFRICA IFO Production, Republic of Congo

LCC Logistics, Cameroon

GULF COUNTRIES IHC Sales, Bahrain

4

Interholco in the World

ASIA IHC Sales, China

3

5

Interholco in Africa

36%

14%

10%

9%

7%

5% 4%

2% 13%

SAPELLI

AZOBE

TALI

WENGE

IROKO

KOSIPO

SIPO

~ 65 mill

EUR

Turn-over

0.7 persons / km2

16’000 people living in the forest we manage

of Switzerland

1/4

1’159’000 ha

8’121’000 people living in

Switzerland

Area of forest we manage

200 persons / km2

Natural Capital Assessment The IHC pilot study for the Forest Products Sector Guide of the Natural Capital Protocol

Sustainable Forest Management in the Congo Basin has a minimal

impact on Natural Capital, protecting forests from irreversible

change to other land-use:

• Only 0.5 to 2 trees per ha are felled, once every 30 years,

• Only 6% to 10% of the annual harvest area receives impact.

• 92% to 97% of Carbon stock is maintained, with reconstitution

of the Carbon stock afterwards.

For the IHC concession in Congo, Sustainable forest management

provides annually about 50 million Euro economic value on 1 million ha,

17 times more economic value than conservation and, many co-

products along with timber.

Palm oil could provide up to 650 times more economic value than

conservation, but destroys the natural capital, i.e. the forest.

source : WCS

Elephant 4’000

Gorilla 70’000

source: WCS

Conservation Area 27% of total forest surface

300’000 ha Eco-guards

50

destroyed 72 poacher camps ritual and traditional uses

Protected sites 71

Environmental Landscape 1.159 mill. ha of natural capital

Medical consultations

12’398

at our hospital in 2016

Entry level wage

220% higher

compared to nat. min. wage in Rep. of Congo

Meetings

over 300

at local and Indigenous communities in 2016

provided for free to the village of Ngombé in 2016

Electricity

1’301 MWh Drinking water

96 mill l

Social Landscape over 16’000 local and indigenous peoples

100% Legal and certified

own wood production

FSC certified 7% 3rd party & 6% 2nd party legality verified

87%

budget spent in 2016

Local suppliers

23 mill € Taxes

4.4 mill €

paid to ROC government in 2016

incl. pension plan in 2016

Wages & benefits

Economic Landscape over 64 mill. € net sales (2016)

13 mill €

Regulatory Landscape

FSC®/ GRI / PEFC TM/ Global Compact

International Standards

ILO / Biodiversity, Climate Conventions / REDD+ / FLEGT

International Agreements

EU TR, Lacey Act: forest- social- environmental- tax legislation

(Inter-)National Laws

Global

Development

FSC® C022952 ; PEFCTM 15-31-0084

Tropical forestry produces so much more than timber We do more than wood!

Government Rep Congo Basin Countries

‘The future lies in more

advanced and diversified

wood processing. Waste

should be recovered.’

United Nations FAO

Private sector FSC®-certified forest operators

NGOs Local and International

‘A promise to preserve

vital forest resources so

that future generations can

continue to enjoy benefits.’

‘It is unrealistic to believe

that our companies can

continue harvesting only

primary species, just because

markets are used to them.’

‘Tropical forests are

already the second largest

source of employment in

Gabon.’

Key concerns and expectations

3

1

2

Implemented using

a Due Diligence System

and certified timber

Unacceptable: timber of illegal origin

Legal right to harvest forest sources; legal manufacturing, trade & export

Known source: known origin up to the forest (traceability)

3rd party Verified Controlled sources

(no illegal wood; no violation of civil, human and

workers’ rights; no wood from conversion or GMOs)

3rd party Verified Legality

Sustainable forest management

certification

e.g. FSC® or PEFCTM certified wood *

Our Responsible Procurement System

* FSC® C022952 ; PEFCTM 15-31-0084

ACCESS TO INFORMATION Origin, species, product type, supplier, legality documents

A

RISK EVALUATION With regard to origin (country/ region) and species

B

RISK MITIGATION Complementary documents and Field audits

CONFORM : PURCHASE NOT CONFORM:

NO PURCHASE

Is the wood and supply chain certified? Risk mitigation by certification

Risk evaluation: suppliers and products Information on the suppliers, documents on origin,

legality and chain of custody/ risk of mixing

C

YES

POSITIVE

POSITIVE

LOW / NEGLIGEABLE RISK

NEGATIVE

NEGATIVE

VERY HIGH RISK HIGH / NON NEGLIGIBLE RISK

NO

NOT ENOUGH INFORMATION

Annual external

audit of the

Due Diligence System (DDS)

Field audits are key in Africa / high risk areas !

2nd party legality verified

FSC® certified Legality & FSC® Certified

3rd party legality verified OLB, VLC, Controlled wood 6%

7%

100% 87%

Own wood products Procured wood

Different sources classify certain countries in the tropics and

elsewhere as high risk for illegality.

Nevertheless, working with these countries is crucial for

environmental protection and more:

Corruption Perception Index Transparency International

Timber Risk Assessment NEPCon Sourcing Hub

Global Forest Registry FSC risk assessments

Enhancing forest protection and more

1. Field audits, certification allow to mitigate risk, avoid illegality

2. Procurement of timber drives development and growth in remote areas, fostering governance improvement

3. SFM treats the forest as a ‘natural capital’ with environmental, social and economic benefits. It is the best land-use against deforestation and forest loss by agriculture and mining

NB: Illegal logging, except where clearing land, may have adverse impacts, but does not in and of itself destroy the forest

Legality definition in EU TR compliant standards e.g. FSC-STD-40-005 , NEPCon LegalSource; Control Union TLV…

EU TR Definition of Legality cf. art. 2 (h):

“Applicable legislation…., in the country of harvest covering... :

1. Legal rights

to harvest

1.1 Land tenure and management rights

1.2 Concession licenses

1.3 Management and harvesting planning

1.4 Harvesting permits

- rights to harvest timber within legally gazetted boundaries,

2. Taxes & fees

2.1 Payment of royalties and harvesting fees

2.2 Value added taxes and other sales taxes

2.3 Income and profit taxes

- payments for harvest rights and timber including duties

related to timber harvesting,

3. Timber harvesting activities

3.1 Timber harvesting regulations

3.2 Protected sites and species

3.3 Environmental requirements

3.4 Health and safety / 3.5 Legal employment

- timber harvesting, including environmental and forest

legislation including forest management and biodiversity

conservation, where directly related to timber harvesting,

4. 3rd parties’ rights

4.1 Customary rights ; 4.2 Free, prior and informed

consent ; 4.3 Indigenous Peoples’ rights

- third parties’ legal rights concerning use and tenure that are

affected by timber harvesting, and

5. Trade & transport

5.1 Classification of species, quantities, qualities

5.2 Trade and transport 5.3 Offshore trading &

transfer pricing 5.4 Customs regulations 5.5 CITES

- trade and customs, in so far as the forest sector is

concerned.»

EUTR: field verification is crucial 1. Link documents with the wood product (documents alone usually don’t show legality) 2. Verify legality aspects in brown

Example of a Supplier Risk Assessment

Since 2012, we regularly audit all non certified suppliers based

on our Due Diligence System

Field audits help detect non conformities, improving market availability & eliminating unfair competition:

• Forest & environmental legislation: impact of harvest in buffer-zones,

trees harvested under minimum diameter, surpassing volume

• OHS (Occ. Health & Safety): safety equipment not compliant,

no risk assessment, no OHS committee

• Workers’ rights: lack of certain contracts, lack of organized union

(no child labor incidences seen)

• Refuse to cooperate/receive field audits, for business or other reasons

Rare non conformities registered (wood non compliant) :

• No clear origin proof and likelihood of illegal origin, e.g. ‘Bois Sauvage’

from smallholders, community forests

• Logging outside or without a valid logging permit

• Forest management plan not finalized/ submitted within legal timeframe

• Wrong declaration of species, e.g. Pericopsis elata declared as Iroko

• Significant delay or non payment of taxes, without agreement

Supplier Evaluation in Central Africa

Total number of suppliers (2014-2017): 20 to 22

• Of which certified / 3rd party verified

14 to 16

• Of which internally verified/audited for legality

5 to 8

• New suppliers accepted per year

1 to 4

• Proportion of potential suppliers accepted

1 out of 3

Made in Africa wood is Fair & Precious

In 2018, SPOTT

assessed 50 timber

and, pulp & paper

companies across 10

categories

(+100 indicators):

‘The average score of

companies with FSC or

PEFC forest certification

is 45% compared to 11%

for companies with no

such certification.’

Contributing to sector transparency

Interholco leads the pack for the

2nd year in a row, with a score of 93.4%

Future-minded consumers buy sustainably!

More than wood, more than just the forest

Tropical forest management

develops timber products

loaded with

rural development &

environmental conservation

SHAPING THE FUTURE

ACTING TOGETHER

Thank you for your attention

INTERHOLCO AG

Schutzengelstrasse 36

6340 Baar, Switzerland

Email:

Tom.van.Loon@interholco.com

Office Phone: +41 (0)41 767 03 81

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