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WWF-UKFOREST&TRADEN E T W O R K

WWF-UK FTN Annual Report2004/2005

Contents

1 Members List

3 Introduction

4 Background

6 Highlights

8 Targets and Progress

10 Statistics

12 Conclusion

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Sector Organisation name Year joined FTN

Retail B&Q plc 1991Boots Group plc 1992Co-operative Retail 1996Focus (DIY) ltd 1992Homebase ltd 1996J Sainsbury plc 1995Marks & Spencer Group plc 2004The Body Shop 1996W H Smith ltd 1995

Paper BBC Worldwide ltd 1995Crowley Esmonde ltd 1996Graham & Brown ltd 1994John Dickinson Stationery ltd 1995MBNA Europe Bank Ltd 2004Office Depot UK ltd 1995Paperback 2000Pearson plc 2004Polestar Group ltd 2001The Beacon Press 2001

Construction BAA plc 2001Balfour Beatty Rail Projects ltd 1995Bovis Lend Lease ltd 2000British Waterways 2002Carillion plc 1997Countryside Properties 2004National Railway Supplies ltd 1999Network Rail Infrastructure ltd 1996Redrow Group plc 2003

Timber/ply/joinery Clarks Wood Company ltd 1996Ecotimber 2000Magnet ltd 1995Richard Burbidge ltd 1992Saint-Gobain Building Distribution ltd 1998Scottish Woodlands 2000Timbmet Silverman 1999Travis Perkins plc 2003Wallis Joinery 2002

Other Blue Line 2000Chindwell Company ltd 1992David Craig 1992F&C Asset Management plc 2001Fantasia ltd 2000Forest Enterprise 2001Horsham District Council 2002Lambeth Borough Council 2002Moores Furniture Group ltd 1998Oxfam 2000Paragon Business Furniture 2002Royal Institute of British Architects 1995Shadbolt International 1992The Woodland Trust 2000WWF-UK 2004

FTN Members ListAs at 30 June 2005The current Membership List and further details can be found at our website; www.wwf.org.uk/ftn

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Report Summary

The WWF-UK Forest & Trade Network (WWF-UK FTN)…

• represents nearly 30 per cent of the total UK forest products trade by volume;

• includes organisations from a broad cross-section of the UK forest products trade, comprising timber importers, local authorities,

printers, publishing companies, retailers and the building trade;

• is a leading FTN within the WWF Global Forest & Trade Network, and the first to produce an annual report;

• has significant potential to improve forest management in regions of the world identified by WWF as being globally significant for biodiversity; and

• collectively traded a total of more than 9 million cubic metres of credibly certified forest products in 2004.

© WWF-Canon / M EDWARDS

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Introduction

Forests are one of the planet’s great renewable resources, playing a key role in the world’senvironmental and economic health. However, many forests today are abused anddestroyed – not least by illegal and unsustainable logging practices, which are driven inpart by demand for cheap timber and paper products.

The WWF-UK Forest & Trade Network (FTN) is playing an increasingly important part inimproving forest management and reducing illegal logging. The dedication of its manyinfluential members to its ideals and ambitions is remarkable, as you will see in thefollowing pages.

This is the WWF-UK FTN’s first Annual Report. It looks back on our performance over2004 and describes areas where we have made progress and those that still pose achallenge to us. Many changes have been introduced to the UK FTN in recent years, andnew systems are now in place for monitoring not only individual members’ progress, butalso the progress of the FTN as a whole.

WWF firmly believes in demonstrating its accountability and credibility. Reporting theperformance of the UK FTN is just one of the ways we can do this. Of course, we mustbalance our desire for openness and transparency with respect for the commercialsensitivity of much of the information the UK FTN members share with us. We have takenthe first steps by producing this report. We will continue discussions with members aboutpossibilities for increasing the level of information we report over time.

All members of the UK FTN have made a public commitment to WWF’s values. This initself can be a brave move when many of their competitors are happy to conduct‘business as usual’ with little respect for the environmental and social damage that mightresult. Having said that, it is WWF’s role to continue challenging FTN members to improveupon their past progress.

A challenging work schedule has been set for the year ahead, and I look forward to aninvigorating 12 months. Meanwhile, the FTN welcomes feedback; please e-mailftn@wwf.org.uk.

Robert Napier Chief ExecutiveWWF-UK

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WWF-UKFOREST&TRADEN E T W O R K

BackgroundBackgroundThe WWF-UK FTN is affiliated to the Global Forest & Trade Network

WWF-UK FTN

The WWF-UK FTN was establishedin 1991. Known then as the WWF1995 Group, it had 20 membercompanies. Its members’ visionwas to ensure that their timber and paper supplies came from wellmanaged forests and did notcontribute to forest destruction andillegal logging practices. Over thelast 14 years the FTN has grown in size and influence, and hasbecome widely recognised as asuccessful partnership betweenWWF and business – a partnershipthat promotes and progressesresponsible management of theworld’s forests.

WWF Global Forest & Trade Network

The GFTN is WWF's initiative toeliminate illegal logging andimprove the management ofvaluable and threatened forests. An affiliation of national andregional forest and trade networks,it consists primarily of companiescommitted to practising orsupporting responsible forestrythrough purchasing policies.Demand-oriented FTNs consistprimarily of retailers, distributorsand specifiers of forest products.Production-oriented FTNs aremade up primarily of forest ownersand managers, processors, andmanufacturers that have achieved,or are committed to achieving,credible certification. The GFTN isactive across nearly 30 countriesthat consume and produce forestproducts in Europe, Latin America,Africa, Asia, and North America.Together, GFTN participants havegenerated the demand that hascreated a new kind of globalmarket in environmentally-responsible forest products.

Note:There are many forest certificationsystems, but currently only theForest Stewardship Council meetsWWF’s criteria for a credibleindependent certification systemthat ensures forests are managedto provide environmental, socialand economic benefits. For more information go towww.fsc.org

The UK FTN was the first to beestablished and has been theleading European FTN inestablishing links with newlyformed FTNs in Ghana, Indonesia,Malaysia and Russia. This not onlyhelps UK FTN members managethe risks of procuring timber fromthese countries, but will alsodirectly contribute to increasing thearea that is credibly certified inthose countries where forests are aprecious resource for people andwildlife, which would otherwise beunder threat from deforestation,illegal logging and poormanagement.

For more information about GFTN go towww.panda.org/forestandtrade

WWF-UK FTN membership commitments

• to work with WWF to trace all wood products back to forest source;

• to phase out all illegal sources and sources from non-certified, high conservation value forests;

• to obtain substantial and increasing volumes of credibly certified wood and/or paper products;

• to supply WWF-UK FTN with a statement of their timber/paper purchasing policy, which meets WWF Global Forest & Trade Network requirements;

• to submit an annual report on forest product use, including an annual action plan with SMART targets for improvement; and

• to comply with the Membership Guidance, Requirements and Communication Code of Practice, including the Green Claims Code.

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BBC WorldwideBBC Worldwide, the commercialarm of the BBC, has been amember of the UK FTN since 1995.BBC Magazines is the UK’s thirdbiggest consumer magazinepublisher, selling almost 100 millioncopies a year. Eight of its titles aremarket leaders and one in fouradults in the UK reads a BBCmagazine every month, includingRadio Times, Top of the Pops,Gardeners' World and BBCWildlife.

In 2004 Radio Times (which sellsmore than a million copies a week),BBC History, BBC Focus andSouthbank magazines were addedto the list of BBC publicationsprinted on FSC-certified paper,(BBC Wildlife and BBC Music havebeen printed on FSC-certifiedpaper since 2000).

The Nation’s Favourite Poems, alsopublished by BBC Worldwide, isthe first consumer book in theworld to carry the FSC logo.

London Borough of Lambeth The London Borough of LambethCouncil joined the UK FTN in 2002,following its involvement in theWWF-UK GovernmentPartnerships project on responsibletimber sourcing.

In 2004 work began on BoatemahWalk, a new building of 18 councilflats in Angell Town.

Formerly one of London’s mostnotorious estates, the 1970sblocks of Angell Town, Brixton,have been replaced by modernproperties including 18 new timber-framed homes at Boatemah Walk.

The new building has become thefirst in the UK to use 70 per centFSC-certified timber. SuppliersSandwood Design and Build andGlobal Timber Frame ltd bothbecame FSC-certified in order todeliver an FSC Chain of Custodyon the project.

Named after Dorah BoatemahMBE, who along with the localcommunity was influential in theRegeneration process, the buildingincludes a number of recyclingfeatures in its construction,including rainwater harvesting anda state-of-the-art photovoltaic roof.

As massive procurers of woodproducts, local authorities have a very important role to play insafeguarding the future of theworld’s forests, and this projectshows how local authorities reallycan make a difference.

Highlights of 2004A sample of FTN members’ achievements

Built at the same cost ofthe other homes in AngellTown, Boatemah Walkproves thatenvironmentallysustainable buildingdesign can be achieved atlittle or no extra cost andis ready to bemainstreamed,” says MattPrescott, EnvironmentalProjects Officer, LambethHousing – Regeneration.“The achievement of 70per cent FSC Chain ofCustody is a credit to thecommitment of thecontractors.

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Timbmet suppliersencouraged to join the Ghana FTNTimbmet Silverman, a leading UK timber importer, has been amember of the UK FTN since 1999.In 2004 Timbmet encouraged oneof its suppliers in Ghana, SamartexTimber and Plywood co ltd, to jointhe newly established Ghana FTN.Samartex provides variety of westAfrican hardwoods to TimbmetSilverman, which in turn suppliesproducts to Travis Perkins, a UKFTN member.

The addition of Samartex to theGFTN completes a supply chain ofparticipating companies bringingforest products from the forest floorto the retail shelf. Its membershipwill help ensure responsiblemanagement of primary forestsand valuable wildlife habitat inwestern Ghana.

“Our responsible purchasingpolicies require that our suppliersprovide us with forest productsguaranteed to have originated inenvironmentally well-managedforests,” said Mike Packer, GroupEnvironmental Manager ofTimbmet Silverman. “Producerslike Samartex, that are committedto supplying legal and certifiedwell-managed timber, provide anoff-the-shelf solution to ourimmediate sourcing needs.”

Timbmet is leading theway in responsiblepurchasing – activelystimulating FSCcertification for thethreatened forests ofwestern Ghana, at thesame time significantlyreducing risk to itsbusiness. In collaborationwith the Ghana FTN,Timbmet is helping tobring the first FSC westAfrican hardwoods to theUK market.Darius Sarshar, Global Producer GroupCoordinator, WWF GFTN.

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FTN managementTargets for 2004

TargetsAchievements

All members to report annually via website, using new reportingcategoriesAll members eventuallyreported using the newcategories, but in somecases further guidance andfeedback were needed toensure the correct category was being used.

All members to have aresponsible procurement policyfor forest products that is alignedwith WWF GFTN.It took longer thananticipated for members toget internal policies signedoff, which meant that thisprocess wasn’t fullycompleted until 2005.

All members to have a credibleaction planSetting suitable SMARTtargets proved difficult andnegotiations continuedthroughout 2004. A members’ training coursehas been developed toimprove this.

Introduce third party auditing of reportsThis target was not met.From the 2003 reports andaction plans submitted in2004, it was apparent thatfurther guidance and trainingwere a priority. Resourceswere put into this activity withthe intention of introducingthird party verification thefollowing year.

To produce WWF-UK FTNmembership packAll FTN members were giventheir membership packs in June 2004.

WWF-UK FTN Progress and Targets

In order for the UK FTN to beeffective in achieving WWFgoals, it needs to includerepresentatives from across thespectrum of the UK timber andpaper trade. Members whocollectively trade in a significantvolume of forest products andare actively progressing theirresponsible purchasing policiesare also part of our objectives.

WWF would like to see the total volume traded by the FTNincreasing, and ensure that the network containssufficient members from eachindustry sector. WWF is alsokeen to see further links withFTNs in key supply countriesleading to an increase in the volume of materialprogressing towards crediblecertification in 2005.

The FTN now has a detailed planfor recruiting new members overthe next three years, ensuringthat we are working withorganisations in the key sectorsand importing from the keycountries (for example Brazil,Indonesia, Malaysia and Russia)necessary to effect change.

All WWF-UK FTN members needto have responsible purchasingpolicies for forest products thatare aligned with GFTNrequirements. All members haveagreed to have their policiesdisplayed on the FTN website –www.wwf.org.uk/ftn. These willappear by the end of 2005.

FTN management Targets for 2005

TargetReason

To introduce third party auditing of reports in April 2005.Carried over from 2004. Third party verification of2004 reports has actuallybeen completed this year.

To increase the transparency ofthe FTN. The first step will be topublish all FTN members’responsible procurement policies for forest products on the FTN website and toproduce an annual report. Both of these to be completedby December 2005. WWF believes that it is vitally important that we areable to demonstrate theaccountability and credibilityof the UK FTN.

To introduce an FTN trainingcourse for members by March 2005.Further training wasidentified as needed,following submission of the 2003 reports.

A graduation process formembers who have achievedtheir goals within the group to beintroduced by December 2005.To reward FTN members who have done what they setout to do, and free upcapacity for recruiting newmembers into the FTN,thereby having greaterimpact on WWF's goals

To recruit five strategicallychosen new members to theFTN, including three from theconstruction sector. The current FTN membership is under-represented in theconstruction sector, which is a major consumer of forestproducts in the UK.

To increase total volume of forest products reported bymembers in reports for 2005.We hope to increase the total by five per cent.Existing members shouldincrease the scope of their reporting. Recruitingnew members to the FTNshould increase the total data reported.

To increase the total volume offorest products reported bymembers in Category 4 –progressing towards crediblecertification (see page 10 forreporting categories). We hopeto see the volume in thiscategory double. The market links made toFTNs in key timber supplyingcountries by UK FTNmembers should result in anincrease in Category 4material in the next reports.

To increase the percentage ofmembers’ Action Plan practicessuccessfully completed over theyear from 66 to 80 per cent andto improve the quality of Action Plans.This should give an indicationthat realistic targets arebeing set and achieved.

FTN management Targets for 2004

Current Statusand Targetsfor 2005

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NOTE:FTN members’ data. Volumes offorest products throughout thisreport are in Wood Raw MaterialEquivalent (WRME) m3. All the datashown in this report relating tovolumes for UK FTN members hasbeen reduced by 20 per cent. This is to take into account tradebetween member companies, and to allow for the risk of double accounting.

How representative is the UK FTN of thetotal UK trade inforest products?The current membership of the UKFTN accounted for nearly 30 percent of the total volume of forestproducts consumed and traded inthe UK in 2004 (see chart 2).Through the FTN, WWF-UK ishaving a substantial and positiveinfluence on the UK trade in forestproducts and, therefore, on theworld’s production forests.

How much impact isthe UK FTN having onkey forest regionsaround the world?WWF has identified more than 200ecoregions around the world whichare of outstanding conservationvalue – the Global 200. In order tohelp WWF achieve conservationgoals for these priority regions, theUK FTN should represent asignificant volume of the total UKtrade from the countries whichcontain forest Global 200ecoregions. As chart 3 oppositeindicates, FTN members handle 20per cent of UK imports of all forestproducts from countries containingkey forest ecoregions. Byimplementing their responsiblepurchasing policies for forestproducts, UK FTN members willfacilitate improved forestmanagement in countries that mayhave especially high biodiversity orprovide unique habitats for wildlife.

UK FTN share ofimports from WWFGlobal 200 forestecoregion countriesThe UK FTN members’ share ofthe total imports from the WWFGlobal 200 forest ecoregioncountries is not uniform. As chart 4opposite indicates, the UK FTNrepresents a significant volume of UK trade from the US andMalaysia. The UK FTN’s futurestrategy needs to increase itsinfluence on all these prioritycountries, especially those whereFTNs have recently beenestablished, such as Brazil,Cameroon, Ghana, Indonesia and Russia.

WWF-UK FTN Statistics for 2004

The WWF-UK FTNreporting categories: Category 1Unknown or unwanted. Material isplaced in this category when eitherthe supplier cannot trace thesource, or when the material isidentified or suspected to beunacceptable within the context of the organisation’s responsiblepurchasing policy.

Category 2Known. Material is placed in thiscategory when traceable to anacceptable level and compliantwith the responsible purchasingpolicy

Category 3Basic Legal Compliance. Materialis placed in this category whenthere is credible evidence, such assecond or third party verification,that it was harvested legally, and is compliant with the responsiblepurchasing policy.

Category 4Progressing towards crediblecertification. Material is placed inthis category when the source isworking towards crediblecertification and is compliant withthe responsible purchasing policy.

Category 5Credibly Certified. Material isplaced in this category when thereis complete chain of custody froma credible forest certificationsystem. Currently only the ForestStewardship Council meets theWWF criteria for a crediblecertification system which providessocial, economic, andenvironmental benefits.

Recycled Ri:pre-consumer waste recycled

Recycled Rii:post-consumer waste recycled

The volume reported in eachcategory in 2004 is shown in chart 1 opposite.

WWF’s Global 200 is a science-based ranking of the Earth'smost outstanding terrestrial,freshwater, and marinehabitats. It provides a criticalblueprint for biodiversityconservation on a global scale.To find out more visitwww.panda.org/global200

Reporting of forest products usageAll UK FTN members must submitan annual report to WWF detailingthe forest products consumed or traded over the previous 12months. This information includesthe timber species, country oforigin, certification system andvolume. Each timber source is alsoassessed by the FTN member andallocated one of seven categories,according to its environmentalcredentials.

UK FTN members follow astepwise approach to eliminatingunknown and unwanted sourcesand increasing the amount ofcredibly certified material traded.

The main purpose of the FTNmembers’ reports is to enableWWF to monitor each member’sprogress. All data and action plansare confidential. In order to remaina member of the FTN, eachmember must demonstrateprogress at moving material up the categories 1-5.

Action PlansEach year members must submitan action plan with at least threeSMART actions for completion inthe coming 12 months. The totalnumber of actions set forcompletion in 2004 was 189, of which 123 were completed in 2004 and 66 are ongoing. Around two thirds of all actionshave been achieved during 2004.

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UK FTN and the WWFGlobal 200 ForestEcoregions

Non-FTN imports fromcountries included inWWF Global 200Ecoregions

3,344,73720%

1,370,591680%

WWF-UK FTNmembers’ share of theUK consumption offorest products

UK FTNmembers’ totalvolume of woodproducts traded

16,662,019WRME29%

40,937,980WRME71%

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UK FTN members shareof Imports from WWFGlobal 200 forestecoregion countries

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UK consumption of wood products(Excluding UK FTNmembers). ForesteryCommission data2004

FTN imports fromcountries included inEcoregions

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In producing this report, WWF has taken the first steps towardsopenness and transparency. Wewill also be publishing members’purchasing policies for timber andpaper on the UK FTN website bythe end of 2005 as well ascontinuing discussions with FTNmembers as to the possibilities ofincreasing the level of informationwe report over time.

WWF’s role is to support as well as to challenge FTN members to improve and to monitor theirprogress carefully. Those that fail to demonstrate sufficient progresseach year will not be able toremain in the FTN.

Third party Verification Following the recommendations ofthe 2003 Review of the WWF-UKFTN, it was decided that externalverification was needed and asample of members’ reports for2004 has been externally verifiedby URS Verification Limited(URSVL). This is the first externalverification that the FTN has done.

We welcome URSVL’s commentsand will be following itsrecommendations for improvingthe accuracy of reporting in futurereports.

The WWF-UK FTN also askedURSVL to undertake independentthird party assurance of the FTNAnnual Report 2004. URSVL’sverification statement has beenincluded opposite.

ConclusionRachel Hembery, WWF-UK FTN Manager

The WWF-UK FTN has come a long waysince it was established in 1991. Theprogress of individual members and of theFTN as a whole has been significant through2004 and challenging targets have been setfor 2005 and beyond.

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Objectives and scope The WWF-UK Forest & Trade Network ("WWF-UK FTN") commissionedURS Verification Ltd ("URSVL") to provide independent assurance ofselected data and information presented in its annual report 2004 ("theReport"). The key objective of the assurance was to verify the completeness and theaccuracy of selected data and information in the report. The selected dataand information that form the scope of the assurance included:• The data systems and supporting information used to generate the FTNmembers’ reports to WWF-UK FTN;• The systems used by WWF-UK FTN to collate and analyse members’data for the annual report; and, • The data and information provided by the report where this relates to theUK FTN membership overall in the 2004 reporting year.Data and information in the Report on the WWF Global Forest & TradeNetwork (GFTN) or individual members were considered to be outside thescope of this verification. Our opinions are based on interviews and reviews of selected informationand data with WWF-UK FTN and a sample of six of its approximately 55members. These were selected objectively to represent a cross section ofWWF-UK FTN members based on industry sector, volume of woodproducts traded, inclusion in External Index ratings and duration ofmembership.

Assurance approachURSVL has assured this Report by applying principles for verifying theaccuracy of data and claims. The information contained in the report is thesole responsibility of WWF-UK FTN. This assurance statement representsthe independent opinion of URSVL. To ensure our independence, URS hasnot provided WWF-UK FTN with consultancy services nor been involved inthe preparation of any material included in the report. URSVL receives lessthan 3% of its annual income from WWF-UK FTN. URSVL has carried out its services by checking samples of data,information and documents, which have been made available to URSVL byWWF-UK FTN and a selection of its members. Accordingly, URSVL has notchecked or reviewed all of WWF-UK FTN and its members’ data,information and documents. The opinion expressed in this assurancestatement should not be used as advice or as the basis for any decisions,including, without limitation, financial or investment decisions.

OpinionWWF-UK FTN is working towards its aim of improving the management ofthe world’s production forests by engaging with a broad range of UK basedorganisations. It provides the framework for its members, which representa significant part of the UK production and trade in forest products, to raisestandards. WWF-UK FTN is trying to raise performance by increasing thevolume of forest products that are produced and traded in credibly certifiedcategories. We commend WWF-UK FTN for producing this, its first annual report;setting out the progress towards its aims and increasing its credibilitythrough independent assurance. We recognise that this is a complex reportbecause it documents the progress of numerous organisations and theirinfluence throughout the supply chain. WWF-UK FTN has recognised thatreporting and assurance will help to set a baseline against which itsperformance can be assessed year on year.

It is not always possible for members to achieve stepwise progressionthrough the reporting categories. Despite members’ best efforts, thedemand for wood products of certain types or from particular countriessometimes exceeds the supply of material currently available that would beclassified in higher categories.For some members the disparity between the UK government criteria for‘legal and sustainable’ timber and the WWF-UK FTN reporting categorydefinitions causes problems. This is because they must use different criteriawhen procuring for government clients and reporting to the WWF-UK FTN.

CompletenessURSVL believes that the report provides a fair and balanced reflection of theWWF-UK FTN’s overall performance when aggregated. However, thevolumes of wood products reported within URSVL’s sample are notcomplete as some members are not reporting their total volume of trade inwood products. In addition, as the WWF-UK FTN has grown to includeinternational companies, some trade in forest products that occurs outsideof the UK is included in the UK FTN members’ total volume of woodproducts traded.

AccuracyThe accuracy of WWF-UK FTN’s annual report is largely dependent on aconsistent approach being used by its members. However, due in part tothe different nature of each member’s business operations, differentsources of information (e.g. sales / purchase records, stock / productrecords) are used, and there is considerable variation in the data systemsused to capture and analyse information, and the databases used toprovide conversion factors, etc. In addition, an estimated factor is appliedto account for trade between members.Finally, action plan targets set by members need to be specific, measurable,achievable, relevant and time-bound (SMART) if they are to provide thebasis for measuring management progress made during the year, whichshould in turn lead to performance improvement. We found that thenumber of targets met is reported accurately, but that some members arenot setting SMART targets.

RecommendationsIn order to continue to improve its performance and reporting, werecommend that WWF-UK FTN:• Clarifies that members are requested to report their total volume of tradein wood products, even if this is currently from an unknown source;• Encourages members’ reporting to extend to their global operations, butasks members to identify wood products trade with other FTN membersand the geographic scope of the trade they are reporting;• Shares experiences and best practice between members to improveconsistency of reporting and drive forward performance; and,• Ensures that members set SMART targets that will actively contribute toachieving the objectives of the WWF-UK FTN.

Dr Belinda Howell, DirectorFor and on behalf of URS Verification Ltd, LondonAugust 2005

Assurance Statement

WWF-UK

Panda House, Weyside ParkGodalming, Surrey GU7 1XRt: +44 (0)1483 426444f: +44 (0)1483 426409

The mission of WWF is to stop the degradation of the planet’snatural environment and to build a future in which humans livein harmony with nature, by:· conserving the world’s biological diversity· ensuring that the use of renewable resources is sustainable· promoting the reduction of pollution and wasteful consumption

www.wwf.org.uk

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