Sustainable Forestry Helps Reap Bigger Profits
12/1/99
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Title: Careful foresters 'make bigger profits'
Source: British Broadcasting Corporation
Status: Copyright 1999, contact source for permission to reprint
Date: December 1, 1999
Byline: Alex Kirby
Conservationists say they have found evidence to show that caring for
the environment, far from being the economic millstone some critics
suggest, can pay its practitioners dividends.
The World Wide Fund for Nature says the evidence is contained in two
reports it is launching on sustainable forestry.
One report compares the performance of four Swedish forestry
companies with that of four similar companies in Finland.
The key difference was that only the Swedish companies had obtained
certification by the Forest Stewardship Council, an international
group which WWF helped to set up, and which promotes good forestry
management.
WWF says the Swedish companies achieved a 62% greater investment
return than their Finnish competitors between 1994 and 1998.
"It is clear that other factors, in addition to certification, played
a significant role in this result. [But] it gives an indication that
companies adopting progressive and environmental standards tend to
perform well in the financial market."
Short-term cost increase
The other WWF report looks at the performance of one of Europe's
largest listed forest product companies, AssiDoman, also Swedish-
owned., which has an annual turnover of $2.8 billion.
The company achieved FSC certification within the last year, and this
has pushed its costs up as it has had to change some of its
practices.
But WWF says "shareholder value analysis shows that these initial
costs will decrease in the near future, leaving the company in a more
competitive position in the long term".
Robert Napier, who heads WWF UK, said: "A company's Certification
pays environmental performance is an excellent indicator of its
management quality, which is a primary determinant for stock market
returns".
"This is especially true for forest product companies, whose main
assets are usually the forest holdings themselves.
"Certification schemes, such as the FSC's, offer companies
independent verification that they are meeting customers'
expectations and shareholders' interests."
WWF says the benefit of certification for a company is that consumers
will recognise its goods have been produced to higher standards and
will therefore be willing to pay more for them.
Uniquely placed
It believes the reports are especially relevant to UK pension funds,
which from July 2000 will be required by law to declare their social
and environmental policies on investments.
The fund manager of the NPI/WWF Investment Fund, Linnet Cotterill,
said: "UK pension funds are in a unique position to take a lead in
adopting investment policies that include better environmental
management as part of their criteria".
"FSC certification can be a useful tool when considering which forest
product companies to invest in.