Complaints Filed Against SFI
On September 9, 2009, on behalf of ForestEthics, a California-based forest conservation organization that uses market forces to promote sustainable and environmentally-sound forestry, WFLC filed complaints against the Sustainable Forestry Initiative (SFI) forest certification system with the Federal Trade Commission (FTC) and the Internal Revenue Service (IRS).
The FTC complaint alleges that SFI engages in deceptive and misleading national advertising; the IRS complaint reports SFI for potentially inappropriately using a tax-exempt “public charity” for funding, operating, and marketing its private forest certification label.
SFI is a forest certification system that “green certifies” more than 160 million acres of private, state, and provincial forests in the U.S. and Canada. SFI’s forest certification label can be found on hundreds of products and in the environmental credentials section of many timber and paper company website.
Certification of forests and the lumber and wood fiber that comes from them is big business as the “green building” market is expected to grow to about $140 billion by the year 2013. Green-certified wood and paper is a growing component of the overall green building market. Certified paper is also a rapidly growing component of the $150 billion print and paper marketplace.
One of the key features of any forest certification system is the system’s independence from the timber and paper industry. Founded in 1994 by the American Forest and Paper Association, SFI now maintains that it is a “fully independent nonprofit public charity.” But SFI is funded virtually exclusively by the timber and paper companies it certifies and its board of directors, governance, and standards-setting process is heavily weighted in favor of industrial interests.
The FTC complaint asserts that SFI is deceptive and contrary to federal fair advertising laws in the following ways:
- SFI maintains a “Certified Fiber Source” label that implies a wood or paper product is certified when, in fact, it might not be.
- SFI represents itself as an “independent non-profit public charity” yet this claim is deceptive because virtually all of SFI’s funding comes from the timber and paper companies it certifies and because SFI is substantially governed and its environmental standards are for the most part set by industry personnel.
- SFI maintains environmental “standards” that are deceptively vague, ambiguous, and riddled with qualifiers and weasel words. We believe these “standards” allow SFI forest managers to conduct environmentally-harmful forestry while claiming their forestry practices are “sustainable” and environmentally protective.
- SFI’s program for certifying forests lacks transparency and deprives the public from knowing what landowners are doing or not doing in their forests to protect the environment.
The IRS complaint asks the IRS to review whether SFI is properly organized and operating as a “public charity.” The complaint asks the IRS to consider:
- SFI maintains itself as a “public charity” that serves the public interest yet, virtually all of SFI’s funding comes from the private companies it certifies and these companies dominate SFI’s governance structure and standards-setting process. SFI does not, in our opinion, serve the public charitable purpose of promoting sustainable and environmentally-friendly forestry. Instead, SFI’s serves the private interest in maintaining a green label for forestry that is no more protective than that required by applicable forestry laws.
- SFI is organized as a “public charity” but may not receive one-third of its financial support from donations by the general public, as required by federal tax law and regulations. We ask the IRS to investigate SFI’s claim that it raises sufficient “public support” to qualify as a “public charity.”
Read the FTC complaint.
Read the IRS complaint.
Why Have We Taken On SFI? Read WFLC director Peter Goldman’s statement.