An Express Investigation – Part Three: Red flags, India’s green certification under cloud

Forest certification is a sunrise industry, driven by a growing preference to avoid any product that can be linked to deforestation or illegal logging. In India, the forest certification industry is growing at 8 to 10 per cent every year, mainly catering to exporters wanting to tap the US and European markets that have strict regulations to ensure the legality of wood products coming in. Only processed wood is allowed to be exported from India, not raw wood.

Over the last few months, The Indian Express spoke to several stakeholders — certificate providers and certificate holders, traders, past and present forest officials, government representatives and academics – to understand whether certifications were leading to greater adoption of sustainable practices in the management of forests, and more ethical trade of forest-based products.

The investigation revealed that certifications in India were mainly a tool to bypass regulatory requirements in Europe and the US, where India’s forest-based products have an export market worth Rs 4,000 to Rs 5,000 crore every year.

“It is easy to obtain forest certifications in India, if you are willing to pay the fees. There are several unscrupulous operators who are willing to make a quick buck. In fact, because of the intense competition amongst certification bodies, it is largely a buyers’ market. If you negotiate hard enough, you can drive down the costs of certification considerably,” said an executive of the India-based office of a foreign certification body.

Such attempts at greenwashing were the subject of a major report unveiled at the UN climate conference in Egypt last year.

The investigation also found that the forest department, the custodian of India’s forests, was deeply resistant to the idea of forest certification, claiming that Indian forests were already being managed in an extremely sustainable manner through the 10-year working plans. Just 5 per cent of India’s natural forests are currently certified, all in Uttar Pradesh.

The main seekers of certifications have been exporters of wood products and other forest-based goods. But even here, there is a huge dropout rate. Forty per cent of all certificates issued in India by two of the largest global certification systems – FSC or Forest Stewardship Council, and PEFC or Programme for Endorsement of Forest Certifications – have not been renewed.

Pramod Gupta, who used to run a certification business but has moved out of the sector now, said, “Most of these terminations happen because of business reasons. Exporters go in for certifications hoping that it would lead to an increase in their businesses. But when that does not happen, companies find the expenditure on certifications unsustainable.”

But there have been at least six instances in which the certifications issued have been terminated because of non-compliance or alleged fraud – four by FSC and two by PEFC.

Gupta’s firm, Wood Certification Pvt Ltd, was a subcontractor for a large international certification body, but its contract was revoked three years ago on insider complaints about the use of unfair practices in recommending certifications. Gupta claimed it was a sabotage by people who had begun working with his company with the specific objective to jeopardise his business.

FSC and PEFC, and others like them, are developers and owners of certification standards, much like the International Organisation of Standardisation (ISO) or the Bureau of Indian Standards (BIS). The actual work of evaluation, recommendation of certifications, and monitoring of compliance is carried out by certification bodies and their subcontracted auditors.

In the case of PEFC, there is another layer involved. PEFC does not insist on the usage of its own standards. Instead, like its name suggests, it also endorses the ‘national’ standards of any country. In India, it has endorsed the standards of Network for Certification and Conservation of Forests (NCCF), an organisation started by Jain in collaboration with a group of former forest officials.

Jain said the current procedures had plenty of room for compromises to be made. “There just aren’t enough mechanisms to ensure that all the prescribed protocols are being followed,” he said.

Jain’s own role has been under the scanner, however. In 2009, he started a company called GICIA India Pvt Ltd (GIPL) which began taking subcontracting work from US-based certification body SCS that used to provide FSC certifications. After a 10-year association, SCS terminated the contract of GIPL in 2019 on complaints of integrity violations.

Incidentally, in 2015, Jain had teamed up with a few retired forest officers to set up NCCF, and developed India-specific forest standards. NCCF received the PEFC endorsement in 2017. GIPL, Jain’s original company, then became accredited as a certification body with NCCF while Jain was the founder convenor of NCCF, a position that he continues to hold.

Jain said he was aware of the potential conflict of interest but had been able to “manage” it well.

“I am a promoter of GIPL but resigned from all roles three years ago. No one in my family holds any position in GICIA. At NCCF, I am founder convenor but I am not part of decision-making processes with regard to certifications. GIPL is also accredited to the National Accreditation Body for Certification Bodies (NABCB), and the fact of my position at NCCF is very clearly disclosed in the papers submitted there,” he said.

Jain rejected accusations that GIPL had indulged in unfair practices, as alleged by SCS while terminating its contract.

“Our contract was revoked on false grounds. A group of GIPL employees broke off and created their own company, and SCS transferred all my business there. I have documentary evidence for all this. I have registered FIRs against my former employees and SCS. I have also lodged a complaint with NCLAT where the matter is being heard. I had become almost bankrupt because of this episode,” he said.

But many other players in the certification industry see Jain not as a victim but one of the most powerful operators. “Sachin Raj Jain is more influential in the Indian forest certification industry than probably anyone else. He runs the NCCF almost single-handedly. The other office-bearers do not matter,” said an executive from another certification body, asking not to be named.

The role of the government has also been curious. Based on the recommendations of an expert report in early 2000s, the Environment Ministry had initiated a process to create national forest standards. By 2011, the Ministry was even ready with a draft Cabinet note, but somehow it wasn’t followed through. When the NCCF came into being, the Environment Ministry appointed one of its officers on its governing board.

Later, the Director General of Forests, in a letter on May 2, 2019, suggested to the state governments that they could get their forests certified through the NCCF.

In August last year, the Ministry associated itself with the FSC – Environment Minister Bhupender Yadav launched new India-specific forest standards developed by FSC.

Meanwhile, a group of retired forest officials, including at least three former Directors General of Forests, have been repeatedly warning the Ministry of the dangers of letting Indian forests be certified by “foreign lobbies” which, they claim, were trying to “infringe on India’s sovereign management of its forest resources”.

In a letter addressed to the then Environment Minister Prakash Javadekar on July 1, 2020, these officials said instead of promoting certifications, India should work bilaterally with EU and the US to facilitate the entry of India’s forest-based goods in their markets.

“Certification is being justified on the grounds of it having become a non-tariff barrier to our handicraft exports to Europe and North America. But the right response to unjustified trade barriers for our handicraft is bilateral discussions with the concerned countries as well as dispute settlement mechanisms under the WTO. Certification is relevant only for countries that export round timber in log form but India is a timber deficient country, importing huge quantities of timber to meet the needs of domestic market. Only countries like Malaysia, Brazil and Indonesia that export timber are setting up systems of certification for government-controlled forests and there is no justification whatsoever (for India) in copying them,” these officers wrote.

In another letter to the current minister Bhupender Yadav on April 5, 2022, two officers from the previous set said that “a scam” was being forced on India in the name of certifications by foreign agencies with the help of some of their own past colleagues in the forest service. This time the officers recommended that the government must come up with its own certification standards.

The Ministry is now once again in the process of preparing its own certification standards.

C P Goyal, Director General of Forests, said, “The government wants to develop indigenous systems of certification that will be simple, transparent and easy to adopt, even by small farmers and tree growers. The benchmarks will adhere to internationally accepted norms and at the same time will take into account national circumstances. The purpose is to make available sustainably certified products for the domestic markets.”

“India is opposed to the practice of third party certification, by agencies based in Europe, mandatory for export of its wood and wood products. This issue has been raised during negotiations for FTAs with these countries. With its indigenously developed certification system, India will negotiate with these countries for its recognition,” Goyal said.