New Approaches to Beating Fraud in Certified Timber and Paper Supply Chains


Consumers increasingly want only timber and paper products from sustainable woodland. How are the certification schemes the industry uses to ensure only certified products reach the consumer being misused and how is the industry responding?

Forest management certification schemes provide two basic forms of control. Firstly, to show materials come from well-managed sources, the woodland needs certification against forest management scheme. Secondly, to control the flow of this material through the supply chain there must be chain of custody certification. This requires a short annual onsite audit of all manufacturers and traders along the supply chain. Because thousands of companies have chain of custody certification, there is a risk some of these businesses will abuse the system and act fraudulently.

Misuse and Fraud

One of the easiest ways to abuse the system is by selling ineligible produces as certified and then informing the controlling certification body that no sales of certified products were made. Certificate holders with no sales profit from less controls and, therefore, it can be questioned why these businesses need their certification. Certification Bodies must report to the Forest Stewardship Council™ (FSC™) if certificate holders declare  no sales of certified products, since the last annual control visit.

As reported by FSC, a group of charcoal producers and charcoal traders had their certificates suspended following an investigation. This revealed sales of non-conforming products and the exploitation of the FSC system by evading the scrutiny of audits by certification bodies. The investigation followed a series of ‘Transaction Verification’ actions to identify mismatches in the volumes of FSC-certified charcoal being traded in supply chains, and the detection of false claims for non-conforming products. The investigation was supported by forensic testing conducted by the FSC and several incident investigations conducted by Assurance Services International (ASI). The investigation discovered that over 18,000 tons of non-conforming material had been sold to distributors and retailers as FSC-certified.

Following an extensive investigation into Paulownia supply chains, the FSC has acted against several companies that were found to have traded non-certified Paulownia as FSC-certified. These companies were subject to either the termination or suspension of their trademark licenses or further investigations. Paulownia is commonly cultivated in plantations in northern China for its light wood, and is used for housing components, sports equipment, furniture, and musical instruments. Mismatches in the supply chain were detected through ‘Transaction Verification’ – essentially, the traded volume of Paulownia was much larger than the volume produced in certified forests.

Traditional and New Control Systems the Material Flows

Consumer assurance that products contain what is stated on the label is still predominantly based upon annual audits of companies in the supply chain. These provide certificate holders with feedback on their chain of custody systems, indicating where their system is working well and where it needs improvement.

Audits also allow the detection of possible misuse and fraud. During the visit, the auditor will collect information from different sources, interviewing various people, reviewing documents and procedures, and making a tour of the site. It should be impossible to hide deliberate falsification of certification claims but, this system has limitations because the audit only represents a snapshot of the certificate holder’s performance on one day.

New technologies are being developed that can help to detect mistakes and abuse of the system. Chemical testing can provide detailed information on the composition of wood fiber – used to detect large-scale fraud in the charcoal industry. Some laboratories are also performing isotope testing, analyzing samples to identify not only the species of tree but also its geographical origin.

Another problem with the traditional controls is that each economic operator in the supply chain is audited separately. There is a risk of fake transaction documents being passed between certified organizations. To address this, the FSC started ‘Transaction Verification’, where transactions between certified companies are tracked. Currently, this process is complicated because it is based on old technology – spreadsheets being sent between operators – which makes it difficult to collate and manage the data. However, new systems will be developed that will support companies in registering their certified purchases and sales, allowing an automated approach to transaction verification.

Achievements of the Traditional Control System

Fraud is a hot topic in the forestry, timber, and paper industries. New control approaches and technologies have uncovered several instances of fraud, creating mistrust and raising fundamental questions about the traditional certification system. They have shown how important it is for the industry to continue its fight against these abuses of the system while also supporting the organizations that properly manage their chain of custody systems.

However, it is important to highlight the significant achievements of the industry in fighting fraud during the last 25 years. These have mainly been based on the traditional auditor system. Today’s consumer can buy a growing number of labeled timber and paper products, and be assured these products come from well-managed forests. Furthermore, certification systems contribute to the supplementary control of non-certified materials, by enhancing transparency and improving global forest governance.

For more information, please contact:

Author Christian Kobel
Job title: Global Business Manager Forestry, Timber and Paper
Phone:  / +41 78 621 7552
SGS holds multiple FSCTM and PEFCTM accreditations and licenses. Visit



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