WWF-UK FTN ANNUAL REPORT

2005 /2006

Report Summary

In the year under review, the WWF-UK Forest & Trade Network…

•collectivelytradedmorethan25millioncubicmetresofforestproducts;

•collectivelytradedmorethan31%ofthetotalvolumeofforestproductsimportedintotheUK;

•collectivelytradednearly12millioncubicmetresofcrediblycertifiedforestproductsin2005;

• includesorganisationsfromabroadcross-sectionoftheUKforestproductstradecomprisingtimberimporters, localauthorities,printers,publishingcompanies,retailersandthebuildingtrade;

•continuestobetheleadingFTNwithintheWWFGlobalForest&TradeNetwork;and

•hassignificantpotentialtoimproveforestmanagementinregionsoftheworldidentifiedbyWWFasbeing globallysignificantforbiodiversity.

Contents

2 List of Members

3 Introduction

4 Manager’s Review

5 Background

7 Members’ Highlights

11 Progress and Targets

13 Statistics

17 Assurance Statement

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FTN List of MembersAs at 30 June 2006

Thecurrentmembershiplistcanbefoundonourwebsite;www.wwf.org.uk/ftn

Sector Organisation name Year joined FTN

Retail B&Qplc 1991 BootsGroupplc 1992 Co-operativeRetail 1996 Focus(DIY)ltd 1992 Homebaseltd 1996 JSainsburyplc 1995 Marks&SpencerGroupplc 2004 TheBodyShopUK/ROI 1996 WHSmithltd 1995

Timber/panels/joinery/furniture ChindwellCompanyltd 1992 ClarksWoodCompanyltd 1996 DavidCraig 1992 Ecotimber 2000 Fantasialtd 2000 Magnetltd 1995 MooresFurnitureGroupltd 1998 ParagonBusinessFurniture 2002 Saint-GobainBuildingDistributionltd 1998 ShadboltInternational 1992 TimbmetSilverman 1999 TravisPerkinsplc 2003 WallisJoinery 2002

Paper BBCWorldwideltd 1995 CrowleyEsmondeltd 1996 Graham&Brownltd 1994 MBNAEuropeBankLtd 2004 OfficeDepot(UK)ltd 1995 Paperback 2000 Pearsonplc 2004 PolestarGroupltd 2001 RobertHorneGroupltd 2005 TheBeaconPress 2001

Construction BAAplc 2001 BovisLendLeaseltd 2000 BritishWaterways 2002 Carillionplc 1997 CountrysidePropertiesplc 2004 NetworkRailInfrastructureltd 1996 RedrowGroupplc 2003 RoyalInstituteofBritishArchitects 1995

Others F&CAssetManagement 2001 ForestEnterprise 2001 LondonBoroughofLambeth 2002 Oxfam 2000 ScottishWoodlands 2000 WWF-UK 2004

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ThisisthesecondannualreportoftheWWF-UKForest&TradeNetwork(FTN),whichfocusesontheachievementsofitsmembershipin2005/06.Aroundtheworld,wecontinuetolosenaturalforestattherateofaround13millionhectareseachyear.Muchofthisisconvertedtosingle-speciesplantationsthatprovidefewoftheenvironmental,ecologicalandsocialbenefitsofnativeforests.

Theceaselessspreadofurbandevelopment,illegallogging,landconversion,roadbuilding,mining,forestfiresandclimatechangehaveallcontributedtodeforestation.ThishasbeendemonstratedinseveralreportsrecentlyproducedbyWWFandotherorganisations.

WWFcontinuesitscampaigntobringahalttothisdestructionandtoextendtheconceptofresponsibleforestmanagement.ThegrowthandearlysuccessoftheGlobalForestTradeandNetwork(GFTN)isanimportantfactorinthiscampaign.Worldwide,theGFTNcomprisesmorethan300members,responsibleforover15millionhectaresofforest.Asignificantnumberareforestmanagementorganisations,theremaindermostlybusinessesthattradeoruseforestproducts.Allregardresponsibleforestmanagementaskeytothefuturesustainabilityoftheirbusinessesandarecommittedtoworkingtowardsthisaim.

WithinthisarenatheUK“branch”oftheGFTNcontinuestoflourish.Forexample,IhadgreatpleasureearlierthisyearinrecognisingthefirstfiveGraduatememberstoemergefromtheUK-FTN.Thesearebusinessesthatnowtrademorethan95percentoftheiroutputincrediblycertifiedforestproductsorthosemadefromrecycledpost-consumerwaste.ItisalsoveryencouragingtoseethatsomeFTNmembershavereportedasignificantlyimprovedpercentagelevelofforestproductmaterialvolumecomingfromcrediblycertifiedforestsin2005.

AgreatdealhasbeendoneandexamplesofsomeoftheachievementsofFTNmembersarereportedinthesepages.ButwestillhavemuchtodoandIlookforwardtothecontinuedsuccessofwhatIanticipatewillbeanexpandinggroupin2006.Asalways,Iinviteyourfeedback;pleasee-mailftn@wwf.org.uk.

Robert NapierChiefExecutive,WWF-UK

Introduction

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© WWF-Canon / R LeGUEN

FTN Managers’ ReviewInthis,oursecondAnnualReport,wehaveintroducedindicatorsthatcanbeusedtomeasurethesuccessofthegroupasawhole,yearonyear.Asthestatisticsclearlyshow,theFTNhascontinuedtomakesignificantprogressduring2005/06.Theincreasedlevelsofmaterialverifiedascomingfromlegalsourcesatleastand,moreparticularly,fromcrediblycertifiedsources,areparticularlyencouraging.

Theseoverallincreaseshavebeenachieveddespiteanetlossofsixmembersfromthegroupandtheinabilityofsomememberstocloseoutalloftheactionstheyhadidentifiedatthebeginningof2005.Inmanycasesthisreflectsanover-optimisticoutlookbymembersratherthanalackofcommitment(successmayhavedependedontheexpectedactionsofotherssuchassuppliers,customersandgovernments).Allmembershavereportedasatisfactorilyimprovedpositionwithinthestepwisematrix,(thatis,theyhaveimprovedthescopeofmaterialbeingreportedand/orhavebeenabletomovequantitiesofmaterialintohigherreportingcategories)whichisaprincipalrequirementofFTNmembership.

Inviewingthestatisticswenowproduceeachyear,itisimportanttounderstandthattheFTNisadynamicgroupthatchangesinmembershipprofilefromyeartoyear.Theprincipalobjectiveistoimproveforestmanagementthroughengagementwithbusinessesthatwishtoadvancetheirforestproductsprocurement.Eachyearitishopedthatnewbusinesseswilljointhegroup,bringingwiththemtheirsourcingproblemswhichtheGlobalNetworkcanhelpthemwith,andthatlong-standingmemberswill“graduate”fromtheprocess.Thenetresultisthatwewillnotseegreatstridesforwardin,say,thepercentagelevelofcertifiedmaterialhandledbythegroup,butratherasteadyincreaseinthelevelofinfluencetheFTNhasonUKforestproductconsumptionandincreasesinthetotalquantitiesoflegalandcrediblycertifiedmaterialtradedbyactiveandalumnimembers.

During2005/06weencouragedthedevelopmentofamembersub-grouptoidentifyandtacklesomeoftheproblemsassociatedwithresponsibleprocurementofpulpandpaper.Thesub-groupmettwiceinthefirsthalfof2006andhasidentifiedsomekeyactivityareastobeaddressedin2006/07.

FollowingthefindingsofaninvestigationforWWF,weareplanningtoestablishaconstructionsectormembersub-grouptoexaminetheverycomplexprocurementprocesseswhichcanhinderthetracingofmaterialsbacktosourceintheconstructionindustry.ThesectorisamajoruserofforestproductsandaconcertedefforthereoverthenextfewyearscouldresultinasignificantstepchangeinthelevelofcrediblycertifiedmaterialbeingusedintheUK.

SteveCreweWWF-UKFTNManager

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WWF-UK FTN

TheWWF-UKFTNwasestablishedastheWWF1995+Groupin1991with20membercompanies.Itsmembers’visionwastoensurethattheirtimberandpapersuppliescamefromwellmanagedforests,anddidnotcontributetoforestdestructionandillegalloggingpractices.Overthelast14yearstheFTNhasgrowninsizeandinfluence,andhasbecomewidelyrecognisedasasuccessfulpartnershipbetweenWWFandbusinessthatpromotesandprogressesresponsiblemanagementoftheworld’sforests.

TheUKFTNwasthefirsttobeestablishedandisnowseenasaleadingFTNintheGlobalForest&TradeNetwork.TheUKhasestablishedlinkswithotherFTNsinthemajortimberproducingcountriesThishelpsUKFTNmemberstomanagetherisksofprocuringtimberfromthesecountriesanddirectlycontributestoincreasingtheforestareathatiscrediblycertifiedincountrieswithforeststhatarepreciousresourcesforpeopleandwildlifeandwhichwouldotherwisebeunderthreatfromdeforestation,illegalloggingandpoorforestmanagement.

BackgroundTheWW-UKFTNisaffiliatedtotheGlobalForest&TradeNetwork

WWF Global Forest & Trade Network

TheGlobalForest&TradeNetworkisWWF’sinitiativetoeliminateillegalloggingandimprovethemanagementofvaluableandthreatenedforests.TheGFTNisanaffiliationofnationalandregionalforestandtradenetworks(FTNs),eachconsistingprimarilyofcompaniescommittedtopractisingresponsibleforestry,orsupportingresponsibleforestrythroughpurchasingpolicies.Demand-orientedFTNsmainlycompriseretailers,distributorsandspecifiersofforestproducts.Production-orientedFTNsaremadeupprimarilyofforestownersandmanagers,processors,andmanufacturersthathaveachievedorarecommittedtoachievecrediblecertification.TheGFTNisactiveacrossnearly30countriesthatconsumeandproduceforestproductsinAfrica,Asia,Europe,LatinAmericaandNorthAmerica.Together,GFTNparticipantshavegeneratedthedemandthathascreatedanewkindofglobalmarketinenvironmentally-responsibleforestproducts.

MoreinformationabouttheGFTNcanbefoundatwww.panda.org/forestandtrade

Note:Thereareseveralforestcertificationsystems,butcurrentlyonlytheForestStewardshipCouncilmeetsWWF’scriteriaforacredibleindependentcertificationsystemthatensuresforestsaremanagedtoprovideenvironmental,economicandsocialbenefits.Formoreinformationgotowww.fsc.org

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© WWF-Canon / N C TURNER

WWF-UK FTN membership commitments

All WWF-UK FTN members have signed up to the following commitments:

• toworkwithWWFtotraceallnoncrediblycertifiedwoodproductsbacktoforestsource;

• tophaseoutallforestsourcesthatareillegal,arethesubjectofunresolvedsocialconflictorhavehigh conservationvalue,unlesscrediblycertified;

• toobtainsubstantialandincreasingvolumesofcrediblycertifiedwoodand/orpaperproducts;

• tomakepubliclyavailableaclearstatementoftimber/paperpolicy,whichmeetsWWFGFTNrequirements;

• tosubmitannuallytotheWWF-UKFTNareportonforestproductuse,includinganannualactionplanwith SMARTtargetsforimprovement;and

• tocomplywiththeMembershipGuidance,RequirementsandCommunicationCodeofPractice.

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Bovis Lend Lease encourages FSC certification in its supply chain

BovisLendLeasereportsthatasaresultofitsencouragement,ByrneBros(aconcretesubcontractor)hasachievedFSCcertificationofitsyardinMitchamwithBMTrada.Some90%ofitstimberisplyformwork,sourcedfromThomasiplywoodmanufacturersinUnaiodaVitoria,Brazil,viaTaylorMaxwellTimberMerchants.InJanuary2006,aspartofitscertificationprocess,AndrewKinseyfromBovisLendLeasevisitedtheThomasiplantationandfactoryinBrazilattheinvitationofByrneBrostoseehowtheforestwasmanagedandtheplywoodproduced.

Clarks Wood uses FSC karri decking in Cardiff Bay project

InthefirststageofaprojecttodevelopCardiffBay,60cubicmetresofFSC-certifiedkarrideckingandbearers,suppliedbyClarksWoodCompanyLtd,havebeenlaid.TheprojectwasmanagedbyTaylorWoodrow,designedbyArupandinstalledbyHoustonCoxCarpentry.Theplantation-grownkarriwasobtainedfromSouthAfrica.FSCcertificationwasspecifiedatthestartoftheproject.

Overthenextcoupleofyearsthedeckingwillbecomethefrontageofacasino,sportscomplexandOlympic-sizeswimmingpooltobeusedbyathletestrainingforthe2012Olympics.Thesitewillalsohostmorethan3,000homesaswellasshops,superstoresandotherleisurefacilities.GeoffOsborne,ManagingDirectorofClarksWood,said,“It’snoteasytocarryallspeciesofFSC-certifiedhardwoodorallthedifferentdeckingformatswhichanarchitectmayspecify.Oftencontractorsfindthemselveswithoutwoodveryclosetoactualinstallationdates,withanexpectationoftimberbeingreadilyavailableinasupplier’syard.”

ButClarksWood,hesaid,prideditselfinbeingabletosourcetospecificationinthequickestpossibletime,duetoitsextensivesupplierdatabase.“Sometimestheshipmentmaynotbeasquickasthecontractorwouldlike,butitwillberealisticandaspromised.ThekarrideckingwasatypicalprojectwhichrequiredmanyFSC-certifiedcomponentstobesuppliedandthedeliverydatewascritical.Whilemanyotherspeciescouldhavebeenused,karrimatchedthehighstandardrequired–whichincludedvisualstrengthgradingintheUK–andwasshippedontimefortheproject.”GeoffOsbornealsonotedanincreaseintheuseofFSC-certifiedtimberin2006.

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WWF-UK FTNMembers’ Highlights

Co-op launches FSC-approved quilted bathroom tissue

Co-oplaunchesFSC-approvedquiltedbathroomtissueIn2005Co-operativeRetailbecamethefirstsupermarkettolaunchanown-label,FSC-approvedquiltedbathroomtissue.NickCliffe,FSC-UKdirector,commented,“ThecommitmentofretailerssuchastheCo-optotheFSCsystemisessentialtoourgoalofimprovingthemanagementoftheworld’sforests.”

TheFSC-accreditedtissueisn’tthefirstCo-opown-labeltissueproducttoreflecttheretailer’sethicalstance.In2001,itlauncheditsinnovativeClosingtheLoopinitiative,whichinvolvescollectingwastepaperfromitsheadofficecomplexinManchesterandrecyclingitintoCo-op100%RecycledBathroomTissueandCo-op100%RecycledKitchenTowels,forsaleinCo-opstoresthroughouttheUK.

Crowley Esmonde sees the FSC Trend Spreading

In2004CrowleyEsmondelaunchedthefirstsupermarket-brandedrangeofFSC-certifiednotebooksthroughJSainsbury.Therangeisnowinitsfourthprintingandisstillsellingwell.Thebookdesignincorporatesasimplestrapline,“SavingForests”,andthesemainstreamproductshaveclearlystruckachordwiththeconsumer.

InNovember2005SchleipenGermanyreceivedFSCcertificationforthepaperCrowleyEsmondehasbeenusingforPaperchasenotebooksanddiarieswhichsellintheUKandtheUSthroughBorders.SinceNovember,CrowleyEsmondehasused45.5tonnesofthisnewlycertifiedpaperanditsprinter/bindernowhaschainofcustody.ThismeansthatthousandsofPaperchaseandBordersnotebooksanddiarieswillbeFSC-certified,andthelogowillbeaddedtoalltheseproductsduring2006.HelenEsmonde,PublishingDirector,intendstohavefurtherFSCrangesinothermajorretailersinthecomingyear.

Focus (DIY) increases its range of FSC Certified Products

Focus(DIY)addedFSC-certifiedsoftwooddoorstoitsrangein2005whenitssupplier,PenrithDoors(partoftheJELD-WENbusiness),gainedFSCchainofcustodycertification.ThisaddstothewidechoiceofFSC-certifiedDIYandgardeningproducts,rangingfromplanedtimberanddeckingtobirdboxesandbarkchips,nowavailablefromFocus.

EnvironmentManagerJoHirstsaid,“Ifwesellwhatweareexpectingtoin2006,98%ofourgardenfurnituretimbervolumewillbeFSC-certifiedorsourcedfromforestsworkingtowardscertification.Thismakesabigcontributiontoimprovingenvironmental,socialandeconomicstandardsincountriesinvolvedinFSCforestryaroundtheworld.”

FocuscontinuesitsFSCcommitmentinallareasofthebusiness.Forexample,ithasswitchedtoPhillipsOfficeSuppliesBusinessSolutionstoprovideFSC-certifiedpaperforitsprintingandphotocopyingneedsatitsSupportCentreinCheshire.Meanwhile,alltimberproductsarescrutinisedbeforetheyareallowedintothebusinessandanewpaper-savingelectronictimberquestionnairehasbeendistributedtosuppliersforthepurpose.

JoHirstadded,“Ourcommitmenttotheenvironmenthasnotmaterialisedovernight.Wehavebeenputtingourpoliciesintopracticeformanyyears”.

8 WWF-UK FTN Annual ReportMembers’Highlights

© WWF-Canon / E PARKER

WWF-UK FTN Annual ReportMembers’Highlights

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Homebase sponsors development of a tropical forest estimator

HomebaseissponsoringaWWFGFTNprojecttoresearch,designandpublishasimplesoftwareapplicationthatwillenablemanagersoftropicalforeststoestimatetheinitialinvestmentandongoingrunningcostsassociatedwithachievingandmaintainingthehighestinternationallevelsofindependentforestcertification.

Whiletheauditcostsassociatedwithcertificationarerelativelywell-known,theyareonlyasmallfractionofthetotalcosts,especiallyintropicalcountrieswhereforestsarehighlycomplexandtheexternalchallengestocertificationarehighest.Atpresent,thereisnooff-the-shelfsourceofreliablecostinformation,thusleavingtheissueshroudedinmysteryandspeculation.Thistoolwillenablemanagerstocutthroughthefogquicklyandsimply,andaccesscostestimatesspecifictotheiroperations.Thiswillenablethemtomakebetterinformedinvestmentdecisions.

Increasedtransparencyoncostswillacceleratetheuptakeofforestcertificationandassistnegotiationsoffairpricesforcertifiedforestproductsthatreflecttherealcostsinvolved.WWFGFTN’shighinternationalprofileintheareaofresponsibleforestryandtrade,anditsglobalnetworkofoffices,willenablerapidandwidespreaddistributionoftheproduct,aswellasface-to-faceproductsupportfreeofcharge.Theprojectwillcontinuefor18monthsuntilearly2008,andwillinvolveawiderangeofstakeholders.Afterthat,the“costestimator”willbecomeavailable.

Homebase’sSustainableBusinessManager,CharlesDrewe,explained,“Homebaseiscommittedtostampingoutthetradeinillegaltimberandtopromotingresponsibleforestmanagementasarealsolutiontothisworldwideissue.Workingwithtropicalforestownersandmanagers,especiallyinareaswherethere’snoFSCoption,ithasbecomeextremelydifficulttoestablishthetruecostofFSCcertification,especiallyinareasofuniquebiodiversity.Asawayofsolvingthisissue,HomebaseisagaindelightedtocontinueourworkwiththeWWFGFTNinsponsoringtheTropicalForestCertificationCostEstimator”.

Marks & Spencer introduces FSC-certified food packaging

Marks&Spencerhasembarkedonajourneytomakeitsfoodpackagingmoresustainable.Thisincludesreducingtheuseofplastics,usingmorerecycledplasticsandfindingalternativesustainablerawmaterials.

Aspartofthisprocess,M&ShasswitchedallitscutsandwichcartonsfromplastictoFSC-certifiedcardboard–andeventheplasticwindowonthecartonsismadefrombiodegradablecornstarch.That’smorethan1.5millionsandwichesinFSC-labelledcartonseveryweek.

M&SworkedwithaUKmillandatrustedprintertogetFSCchainofcustodyinordertodelivertheinnovation,whichisbelievedtobethefirstFSC-certifiedcardboardpackagingintheUK.ThecompanyreportsthattheFSClogoandmessagecannowbeseenonallpacksofcutsandwichesinstoresacrossthecountry.

KatieStafford,SustainableDevelopmentManageratMarks&Spencerdeclared,“It’sagreatexampleofasustainableproductthat’sbetterforthecustomerandfortheenvironment–anditwillresultinourusingmorethan2,500tonnesofFSC-certifiedboard.Wehopethatnowwehaveproveditcanbedone,othersupplierswillfollowsuit!”

MBNA Europe ‘greens’ its supply chain

MBNAEuropeBankcontinuestoencourageitssupplychaintouseFSC-certifiedmaterialsorthoserecycledfrompost-consumerwaste.Forexample,allWWF’screditcardpromotionalmaterialisnowproducedon100%consumerrecycledwasteorFSCpaper.MBNA’spreferenceforFSCmaterialswithitsownsupplierbasehasresultedinanincreaseinthenumberofFSC-certifiedsuppliersand,intermsofmediainserts,significanttonnageofFSCmaterialbeingproduced.TheconsiderableinvestmentmadebyMBNAtoin-sourcetransactionalmailingsin2005hasalsoenabledprimedocumentstobeproducedonFSC-certifiedmaterial.

© WWF-Canon / R Isotti

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Paragon praised for its responsible timber procurement policy

InadditiontoachievingISO140012004,ParagonBusinessFurniture’scommitmenttotheuseofFSC-certifiedtimberinthedesignandmanufactureofitsofficeproductswasakeyfactorinwinningthreeenvironmentalawardsin2005.InMay,ParagonwashighlycommendedforenvironmentalawarenessintheEssexCountywideBusinessAwards;inJuly,itwontheenvironmentalawarenessawardintheBasildonDistrictBusinessAwards;andinNovemberParagon’sQualityandEnvironmentManager,EricTomlinson,wenttotheHouseofCommonstoreceivethegoldawardinthemanufacturingandengineeringcategoryoftheNationalGreenAppleAwards.ParagonalsobecamethesixthFTNmembertoqualifyforGraduatestatus,followingsubmissionofits2005ForestProductsreport.

Wickes gains FSC chain of custody certification and finds a new source for its plywood requirements

WickesBuildingSupplies,partoftheTravisPerkinsgroup,believesthatsourcingtimberandtimberproductsresponsiblyiscrucialtoitslong-termbusinesssuccess.InMarch2005WickesgainedFSCchainofcustodycertification(SA-COC-1420)whichJezCutler,EnvironmentManager,describesas“anaturalextensiontoourresponsibletimbersouringactivitieswhichnowallowsustoserviceanincreasingcustomerneedforevidencethattimberisbothlegalandsustainable”.

Headded,“TheUKgovernment’sCPETprocessprovidedjusttheimpetusweneededtofinishthejobinternallysowecouldprovidetimberthatmeetsthegovernment’scriteriafor‘legalandsustainable’toourtradecustomers.Wedecidednottostopthere,sooursystemalsocoversproductsmorelikelytoappealtoseriousDIYerswhocannowcompletetheirprojectswithafullchainofcustodyfromforesttothemselves.”

Wickesclaimstohavemorethan450productsunderitschainofcustodyincludingsheetmaterials,sawntreatedtimber,mouldings,doors,flooring,wallpaper,fencesandBBQcharcoal.

InpartnershipwithFinnforestUK,WickeshasfoundasatisfactorysourceforitsFSCplywoodrequirements.ThetwocompaniesvisitedCymaoinMalaysiaandaskedforsomesiteenvironmentalimprovementsandassurancesconcerningthecontrolledwoodprocessesbeingemployed.JezCutlerexplained,“Theproductofferedwasfrommixedsources,sowewantedtounderstandwhatlevelofbuyingcontrolwasbeingexercised.CymaohasbeenproducingforWickessinceaboutJuly2005andwehopetheentirehardwoodplysoldinourstoreswillbefromanFSCsourcebytheendof2006”.

Wickes Environment Manager Jez Cutler on a recent FSC timber sourcing visit to Malaysia.

WWF-UK FTN Annual ReportMembers’Highlights

Eric Tomlinson (right) receives Paragon’s ISO 14001 2004 certificate from David James, Managing Director of BM TRADA Certification. John Barker (centre) is Client Manager, BM TRADA Certification. He performs external audits for ISO 14001 and FSC chain of custody.

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New FTN Graduatemembership category

CongratulationstoWWF-UKFTNmembersChindwellCompanyLtd,DavidCraig,Ecotimber,ForestEnterpriseandPaperbackonachievingGraduatestatusin2005,andtoParagonBusinessFurnitureforachievingthesamein2006.GraduatestatusisanewprestigiousFTNmembershipcategorythatrecognisestheachievementsofmemberswhosetradebyvolumeinforestproductsisnowconsistentlymorethan95%crediblycertifiedand/orrecycledpost-consumermaterial.Graduatemembersarenotrequiredtopayamembershipfeeortoreportannuallythedetailoftheirtimberprocurementotherthantoadviseofanysignificantchangeinvolumeofforestproductsconsumedandtoconfirmthattheycomplywiththerequirementsofgraduatemembership.

Membership changes since the last Annual Report:

New Members:RobertHorneGroupltd

Members who haveleft the FTN:BalfourBeattyRailProjectsLtdBlueLineHorshamDistrictCouncilJohnDickinsonStationeryLtdNationalRailwaySuppliesLtdRichardBurbidgeLtdTheWoodlandTrust

WWF-UK FTNProgress & TargetsMembership

Progress on FTN Management Targets set for 2005

•TopublishallFTNmembers’responsibleprocurementpoliciesforforestproductsontheFTNwebsiteandtoproduceanannualreport.

WhilethefirstAnnualReportwasproducedin2005,publicationofmembers’policieswasnotcompleteduntilJune2006duetotechnicalproblems.Members’policiesarenoweitherheldontheFTNwebsiteorcanbeaccessedviaalinktothemember’swebsite.

•TointroduceanFTNtrainingcourseformembersbyMarch2005.

Trainingcoursesformemberscoveringresponsiblepurchasingofforestproductsandreportingwereofferedinearly2005andearly2006.ThesessionswereorganisedandexecutedbyProForest.

•AgraduationprocessformemberswhohaveachievedtheirgoalswithintheFTNtobeintroducedbyDecember2005.

Thiswascompletedand,followinganalysisof2004reports,thefirstfivecompaniestoreceivethisawardwereadmittedtothenewFTNGraduatecategoryin2005.AsixthcompanywasawardedGraduatestatusin2006,followinganalysisofthe2005reports.

•TorecruitfivestrategicallychosennewmemberstotheFTN,includingthreefromtheconstructionsector.

Onlyonenewmember(fromthepapersector)joinedtheFTNduring2005.ThismayhavebeendueinparttostaffchangesatWWF-UKwhichresultedinreducedactivityinmemberrecruitment.

•Toincreaseby5%thetotalvolumeofforestproductsreportedbymembersin2005.

AssumingthatGraduatemembers,exercisingtheirrightnottoreportfullytheirtimberpurchasesin2005,maintainedthesamelevelofbusinessasin2004,thetotalvolumeofforestproductsdeemedtobereportedastradedbymembersin2005was25millionm3–anincreaseof4.2millionm3(20%)onthe20.8millionm3reportedin2004.

•Todoublethetotalvolumeofforestproductsreportedbymembersincategory4–progressingtowardscrediblecertification(seepagexforreportingcategories)

Anincreaseof58%inthevolumeofmaterialinthiscategorywasachieved.Whilethisfallsshortofthetarget,itisencouragingthatmembersarebeginningtoworkmorecloselywithsuppliersinproducercountriespreparedtoinvestincredibleforestcertification.

•Toincreasemembers’actionplanpracticessuccessfullycompletedovertheyearfrom66%to80%,andtoimprovethequalityofactionplans.

Inthe2004/05AnnualReporttheoverallpercentagenumberofactionscompletedbymemberswasincludedasanindicatorofperformance.However,sincememberslistdifferingnumbersofindividualactionsthatvaryintimescaleandlevelsofcomplexityandoptimism,thisstatisticisnotparticularlyusefulasameasureofcollectiveperformance,soithasbeenomittedfromthisReport.Progresswithinthestepwisematrixisamorerelevantmeasureofgroupperformance.Thestatisticmaybereintroducedinfutureyearsifauniformapproachtoactionsettingcanbeestablished.

FTN Management Targets for 2006

•TorecruitfivenewmembersfromtheprivatesectorintotheFTN,withparticularemphasisontheconstructionandpapersectors.

•Todevelopaconstructionsub-groupcomprisingexistingandnewFTNmembersinthissectorinordertotacklethedifficultiesexperiencedbymembersintracingandquantifyingthespecies,sourcesandvolumesofforestproductsused,andtoencourageincreaseduseofcrediblycertifiedmaterials.

•Todevelopalocalauthoritysub-groupofatleast10existingandneworreinstatedlocalauthorityFTNmembers.Theobjectiveistotackledifficultiesexperiencedbymembersintracingandquantifyingthespecies,sourcesandvolumesofforestproductsused,andtoencourageincreaseduseofcrediblycertifiedmaterials.

•ToreviewandensuretheUKFTNstrategyisontracktodeliveritsobjectivesandeffectivelymeettheneedsofmembers,andtoensureitcontainssuitableprocessesofmeasurementthatwilldemonstrateFTNmanagementabilityandeffectiveness.Thestrategyistocontainkeyperformanceindicators,milestonesandaccountabilities.

•Toachieveanincreaseof5%acrossthevariousperformanceparametersshowninthetableofmeasurableindicatorsincludedintheStatisticssectionofthisReport.

Reporting of forest products usage

AllFTNmembers,exceptthosewithGraduatestatus,arerequiredannuallytosubmitareturnontheiruseofforestproductsduringtheprevious12months.Theinformationreturnedincludesthetimberspecies,countryoforigin,certificationstatusandvolume(WRME).EachtimbersourceisalsoassessedbytheFTNmemberandplacedintooneofsevencategories(fiveforvirginmaterialandtwoforrecycledmaterial)accordingtothelevelofinformationavailable.

Graduatemembersbydefinitiontradepredominantly(exceeding95%byvolume)inFSC-certifiedforestproductsorrecycledpost-consumerwastewoodandpaper.Inviewofthis,theyareexemptfromreportingotherthantoconfirmthattheirpositionremainsunchanged.

FTNmembersfollowastepwiseapproachtoeliminatingunknownandunwantedsourcesandincreasingtheamountofcrediblycertifiedtimberconsumed.

FTNmembersvaryinhowtheyuseforestproducts.Inmostinstancesthemajoruseisfortradepurposes,butinsomecasesitisforinternalservicesorpackaging.Membersarenotinitiallyrequiredtoreportonallcategories,butmustreportontheirmajoruseatleast–andtheirpolicymustbeclearabouttheircommitmentinthisrespect.Memberswhotradeinbothown-brandandproprietary-brandedforestproductsmaychooseinitiallytoconcentrateontheirownbrand,butovertimetheywillbeexpectedtoextendtoallbrandsinwhichtheytrade.Again,theirpolicymustbeclearaboutthis.

ThemainpurposeoftheFTNmembers’reportsistoenableWWFtomonitoreachmember’sprogress.Alldataandactionplansareconfidential.InordertoremainamemberoftheFTN,eachmembermustdemonstrateannualprogressinmovingvirginmaterialupthroughcategories1to5(seebelowfordefinitions).

Action plans

EachyearmembersmustreviewtheirActionPlanandsubmitatleastthreeSMART(Specific,Measurable,Achievable,RealisticandTime-bound)actionsforthecomingyear.

Note:FTN members’ data. Volumes of materials throughout this Report are quoted as Wood Raw Material Equivalent (WRME) in cubic metres (m3). The source country is the country in which the forest from which the wood used in a product originated. This may be different from the country in which a product or its components are manufactured. To take into account the performance of current members, all figures quoted (except those described as “like for like”) include assumed volumes for non-reporting Graduate members on the basis of their 2004 business. All figures quoted in this Report are derived from actual data reported by members in both 2004 and 2005 with no allowance made for double counting due to member inter-trading.

WWF-UK FTNStatistics for 2005

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13WWF-UK FTN Annual ReportStatisticsfor2005

WWF-UK FTN reporting categories

Category 1Unknownorunwantedmaterialorsource.Materialisplacedinthiscategorywheneitherthemember’ssuppliercannottracethesourceorwhenthematerialoritssourceisidentifiedas,orsuspectedofbeing,unacceptableinthecontextofthemember’sresponsiblepurchasingpolicy.

Category 2Knownsource.Materialisplacedinthiscategorywhentraceabletoanacceptablelevelandbelievedtobecompliantwiththemember’sresponsiblepurchasingpolicy.

Category 3LicensedSource.Materialisplacedinthiscategorywhenthereiscredibleevidence,suchassecondorthirdpartyverificationthatitwasharvestedlegally,andiscompliantwiththemember’sresponsiblepurchasingpolicy.

Category 4Progressingtowardscrediblecertification.Materialisplacedinthiscategorywhenitssourceisverifiedasworkingtowardscrediblecertificationandiscompliantwiththemember’sresponsiblepurchasingpolicy.

Category 5Crediblycertified.Materialisplacedinthiscategorywhenitsforestsourceiscrediblycertifiedandthereisafullycertifiedandcompletechainofcustodyfromtheforesttothemember.CurrentlyonlytheForestStewardshipCouncilForestCertificationSchemesatisfiesWWF’sminimumcriteriaforacrediblecertificationsystemthatensuresforestsaremanagedtoprovideenvironmental,socialandeconomicbenefits.

Category RiRecycledpre-consumerwaste.

Category RiiRecycledpost-consumerwaste.

Analysis

Atotalof47%ofmaterialreportedastradedbyallmembersin2005wasFSC-certified,comparedwith45%in2004.Giventhecoincidenthugeincrease(4.2millionm3or20%)inmaterialcollectivelyhandledbythegroup,thisriseincertifiedmaterial(2.44millionm3)isasignificantachievement.Thetotalvolumesreportedbymembersineachofthereportingcategoriesin2005comparedwith2004areshowninFigure1.

Onalikeforlikebasis,thatisexcludingGraduates,lapsed2004membersandnew2005members,atotalof35%ofmaterialreportedbymembersin2005,whoreportedinboth2005and2004,wasFSC-certified.Thiscompareswith26%reportedbythesamemembersin2004.Figure2providesalikeforlikecomparisonofmaterialreportedin2004and2005.

Atotalof15%ofallimportedmaterialtradedbymembersin2005camefromtheUS.Thetop10supplyingcountries,whichtogetheraccountedfor64%ofimportedmaterial,areshowninFigure3.

Atotalof73%ofimportedFSC-certifiedforestproductswerereportedtohavecomefromjust10countries,thetopsuppliercountry(20%)beingSweden.Afurther15%wasimportedfromunidentifiedFSC-certifiedsources.Thetop10identifiedsupplyingcountriesareshowninfigure4.

Atotalof70%ofallimportedmaterialreportedbymemberscamefromcountrieswithinWWF’sGlobal200Ecoregions.Thevolumereportedineachcategoryascomingfromthesecountriesisshowninfigure5.

Atotalof69%ofallimportedFSC-certifiedmaterialreportedbymemberscamefromcountrieswithinWWF’sGlobal200Ecoregions,with89%ofthismaterialcomingfromjust10countries.ThevolumesofFSC-certifiedmaterialcomingfromthesecountriesisshowninfigure6.

© WWF-Canon / WWF-Switzerland/A. della Bella

WWF-UK FTN Annual ReportStatisticsfor2005

Key performance indicatorsThefollowingdataprovideanindicationofperformancein2005comparedwith2004andtheaimfor2006.

INDICATORS 2004 2005 Target 2006 million m3 million m3 million m3

TotalvolumeofforestproductsreportedastradedbyFTNmembers 20.8 25.0 26.3

TotalvolumeofforestproductsrecordedbyFTNmembersasimportedmaterial 13.40 16.34 17.2

EstimatedFTNshareofUKconsumptionofimportedforestproducts1 26% 31% 33%

TotalvolumeofforestproductsrecordedasimportedfromWWF’sGlobal200Ecoregions2 10.90 11.41 12.0Totalvolumeofforestproductsreportedascomingfromlegalsources(Categories3,4and5) 13.62 16.17 17.0Totalvolumeofforestproductsreportedascomingfromsourcesprogressingtocrediblecertification2(Category4) 0.14 0.23 0.46Totalvolumeofforestproductsreportedasbeingcrediblycertified3(Category5) 9.35 11.79 12.4

Notes1Anelementofinter-tradingoccursbetweenmembers.InthepreviousReport,areductioninvolumesreportedof20%wasmadetoallowforthis.Thiswasanarbitraryreductionthathadnomeasuredbasis.Sincethelevelofinter-tradingcannotcurrentlybedeterminedaccuratelyandtheestimateusedpreviouslycouldhaveintroducedalargererrorthantheoneforwhichitwastryingtocompensate,ithasbeendecidedtodiscontinuethispracticein2006.

2Ecoregionsarelargeunitsoflandorwaterthatcontainageographicallydistinctassemblageofspecies,naturalcommunitiesandenvironmentalconditions.WWFhasidentifiedaprioritylistofecoregionsthatbestrepresentthebreadthofbiodiversityandecologicalprocesses.ThislistisknownastheGlobal200Ecoregions.TheGlobal200recognisesthefactthat,whiletropicalforestsandcoralreefsharbourthemostbiodiversityandarethetraditionaltargetsofconservationorganisations,uniquemanifestationsofnaturewhichoccurnowhereelseonEartharefoundintemperateandborealregions,andindesertsandmountainchains.Theyriskbeinglostforalltimeiftheyarenotconserved.

3CurrentlyWWFregardstheForestStewardshipCouncilschemeastheonlycrediblecertificationsystem.

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1Forest products traded by all members

2Forest products traded by members (like for like)

3Top 10 countries supplying imported materials traded by FTN members in 2005

WWF-UK FTN Annual ReportStatisticsfor2005

WWF-UK FTN Annual ReportStatisticsfor2005

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4Top 10 identified countries supplying imported FSC-certified materials traded by FTN members in 2005

5Volume of materials from WWF Global 200 Ecoregions traded by FTN members in 2005

6Top 10 identified Ecoregion countries supplying credibly certified material to FTN members in 2005

16

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Objectives and scope TheWWF-UKForest&TradeNetwork(WWF-UKFTN)commissionedURSVerificationLtd(URSVL)toprovideindependentassuranceofselecteddataandinformationpresentedinitsannualreport2005.ThisisthesecondyearthatURSVLhasprovidedsuchassurancetoWWF-UKFTN.Thekeyobjectiveoftheassurancewastoverifythecompletenessandtheaccuracyofselecteddataandinformationinthereport.Theselecteddataandinformationthatformthescopeoftheassuranceincluded:•thedatasystemsandsupportinginformationusedtogeneratetheFTNmembers’reportstoWWF-UKFTN;•thesystemsusedbyWWF-UKFTNtocollateandanalysemembers’datafortheannualreport;and,•thedataandinformationprovidedbythereportwherethisrelatestotheUKFTNmembershipoverallandtheindividualmemberswevisitedinthe2005reportingyear.Dataandinformationinthereportfromothersources,suchastheWWFGlobalForest&TradeNetwork,wereconsideredtobeoutsidethescopeofthisverification.OuropinionsarebasedoninterviewsandreviewsofselectedinformationanddatawithWWF-UKFTNandasampleoffiveofitsapproximately46members.ThesewereselectedobjectivelytorepresentacrosssectionofWWF-UKFTNmembersbasedonindustrysector,woodproductturnover,inclusioninexternalindexratingsanddurationofmembership.

Assurance approachURSVLhasassuredthisreportbyapplyingestablishedprinciplesforverifyingtheaccuracyofdataandclaims.TheinformationcontainedinthereportisthesoleresponsibilityofWWF-UKFTN.ThisassurancestatementrepresentstheindependentopinionofURSVL.Toensureourindependence,URShasnotprovidedWWF-UKFTNwithconsultancyservicesnorbeeninvolvedinthepreparationofanymaterialincludedinthereport.URSVLreceivedlessthan1%ofitsincomelastyearfromWWF-UKFTN.URSVLhascarriedoutitsservicesbycheckingsamplesofdata,informationanddocuments,whichhavebeenmadeavailabletoURSVLbyWWF-UKFTNandaselectionofitsmembers.Accordingly,URSVLhasnotcheckedorreviewedallofWWF-UKFTNanditsmembers’data,informationanddocuments.Theopinionexpressedinthisassurancestatementshouldnotbeusedasadviceorasthebasisforanydecisions,including,withoutlimitation,financialorinvestmentdecisions.

Our OpinionWWF-UKFTNisworkingtowardsitsaimofimprovingthemanagementoftheworld’sproductionforestsbyengagingwithabroadrangeofUKbasedorganisations.Itprovidestheframeworkforitsmembers,whichrepresentasignificantpartoftheUKproductionandtradeinforestproducts,toraisestandards.WWF-UKFTNisimprovingperformancebyencouragingaprogressiveincreaseinthevolumeofcrediblycertifiedforestproductsthatareproducedandtraded.ThisisWWF-UKFTN’ssecondannualreport,settingoutthecontinuedprogresstowardsitsaims.Thisisacomplexreportbecauseitdocumentstheprogressofawiderangeoforganisationsandtheirinfluencethroughoutthesupplychain.Duringtheyear,theWWF-UKFTNhasmadegoodprogressbyestablishingasub-grouptoshareknowledgewithinasector,inresponsetorequestsfrommembers.Signifyingtheprogressbeingmadebymembers,WWF-UKFTNhasalsoformedanewFTNGraduatemembershipcategorytorecognisememberswhosetradeisconsistentlymorethan95%crediblycertifiedorrecycledpost-consumermaterial.Werecognisethatitisnotalwayspossibleformemberstoachievestepwiseprogressionthroughthereportingcategories.Despitemembers’bestefforts,thedemandforwoodproductsofcertaintypesorfromparticularcountriessometimesexceedsthesupplyofmaterialcurrentlyavailablethatwouldbeclassifiedinhighercategories.

Completeness and AccuracyURSVLbelievesthatthereportprovidesafairandbalancedreflectionoftheWWF-UKFTN’soverallperformancewhenaggregated.However,thevolumesofwoodproductsreportedwithinURSVL’ssamplearenotcomplete,assomemembersarenotreportingtheirtotalvolumeoftradeinwoodproducts.TheaccuracyofWWF-UKFTN’sannualreportdependsonaconsistentapproachbeingusedbyitsmembers.However,thereisconsiderablevariationinthedatasystemsusedtocaptureandanalyseinformation,and,insomeinstances,outofdateconversionfactorswereusedbymembers.The2004reportstatedthatwoodvolumeshadbeenadjustedby20%toaccountfortradebetweenmembers.WerecommendedthatWWF-UKFTNidentifywoodproductstradedbetweenFTNmembers,toassesstheappropriatenessofthis20%estimate.Itshouldbenotedthatthisadjustmentwasnotmadeinthefiguresinthe2004report.Inthis2005report,volumesarereportedonalike-for-likebasiswithlastyear(i.e.volumeshavenotbeenadjustedfortradebetweenmembers).Membersneedtosettargetsthatarespecific,measurable,achievable,relevantandtime-bound(SMART)iftheyaretoachievetheiractionplansanddriveforwardimprovedperformance.Comparedtolastyear,membersaresettingmoreSMARTtargetsandaremeetingmoreofthesetargets.Howeverpersonnelororganisationalchangescancausemembersdifficultiesinmeetingtheirtargets.

RecommendationsInordertocontinuetoimproveitsperformanceandreporting,werecommendthatWWF-UKFTN:•requeststhatmembersreporttheirtotalvolumeoftradeinwoodproducts,evenifthisiscurrentlyfromanunknownsourceor,attheotherendofthescale,fromFTNGraduatemembers;•encouragesmemberstoprogressactionstomeettheirtargets,evenwhenfacedwithpersonnelororganisationalchanges;•continuestodevelopmechanismstoshareexperiencesandbestpracticebetweenmemberstodriveforwardperformance;and,•ensuresthatmemberscontinuetosetSMARTtargetsthatwillactivelycontributetoachievingtheobjectivesoftheWWF-UKFTN,andconsidersdevelopingauniformapproachtotargetsetting.

Dr Belinda HowellDirector1ForandonbehalfofURSVerificationLtd,London,September2006

Assurance Statement

WWF-UKPandaHouse,WeysideParkGodalming,SurreyGU71XRt:+44(0)1483426444f:+44(0)1483426409

ThemissionofWWFistostopthedegradationoftheplanet’snaturalenvironmentandtobuildafutureinwhichhumansliveinharmonywithnature,by•conservingtheworld’sbiologicaldiversity•ensuringthattheuseofrenewablenaturalresourcesissustainable•reducingpollutionandwastefulconsumption

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