Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) recently learned from a Forest Stewardship Council® (FSC®) Canada press release that FSC has requested that the Rainforest Alliance certification body extend the temporary suspension of one of Resolute's two certificates in Quebec's Lac-Saint-Jean region for six months, until July 2, 2015.
"I am quite surprised by FSC Canada's last-minute intervention, which to my knowledge is unprecedented," said Richard Garneau, president and chief executive officer of Resolute. "I note that FSC Canada has indicated that it has identified possible solutions to avoid 'unfairly penalizing' Resolute, according to its president, François Dufresne, quoted in the December 21, 2014 edition of the newspaper Le Progrès Dimanche. We are eager to meet with Mr. Dufresne and discuss solutions for reinstating our FSC certificates."
The extension of the temporary suspension is intended to give the Quebec government time to settle its dispute with the Cree First Nation, which dates back to 2002, and to resolve issues with its caribou conservation plan, the two issues that led to the temporary suspension of Resolute's certificates in the Lac-Saint-Jean area.
"Naturally, we would prefer to have our certificates reinstated, but it is clear that Resolute cannot resolve the two major stumbling blocks, and in view of the auditors' interpretations that led to these temporary suspensions, we question whether it is possible for the government to fully address the concerns without major socio-economic impacts on employment and the well-being of communities," added Garneau.
It is also interesting to note that only the Lac-Saint-Jean certificate has been extended, while the Mistassini-Péribonka certificate, which expired on December 3, 2014, is not treated with the same measure of flexibility even though it was alleged to suffer the same defect related to the caribou conservation plan.
"We look forward to clear proposals from FSC Canada for resolving the two issues that are responsible for the temporary suspension of the two certificates, while maintaining the viability of our company and the communities in which we operate," said Richard Garneau. "We are also asking FSC Canada to reconcile the regional and provincial caribou conservation action plans, and on implementation of Motion 65, introduced by Greenpeace and adopted at the FSC's last General Assembly, held in September in Seville, Spain. The motion, which calls for preservation of 80% of intact forest landscapes, is scheduled to come into effect at the end of 2016."
In light of recent events, Resolute believes it is important for FSC Canada to establish an independent comparative analysis of all the audits conducted in recent years in Quebec and Ontario, according to the FSC boreal standard, in order to compare auditors' interpretations and requirements, as well as the efforts made by certificate holders to meet these requirements. FSC Canada should proceed with this exercise for the sake of fairness and transparency for all certificate holders; this goes to the credibility of the standard itself.
"We remain convinced that such an analysis would clearly demonstrate to our employees, communities, governments and customers, that Resolute is a leader in sustainable forest management and would underscore our ongoing commitment to balancing the three sustainability pillars: environmental, social and economic," added Garneau.
Resolute remains committed to the voluntary certification of 100% of the forests it manages to one or more of three internationally recognized sustainable forest management standards used in Canada and recognized world-wide, namely, Sustainable Forest Initiative® (SFI®), FSC and the Canadian Standards Association (CSA). In addition, the company continues to be one of the largest holders of FSC sustainable forest management certificates in Canada and recently successfully renewed its certificates in the Mauricie, Abitibi and North Shore regions of Quebec.