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Resolute Forest Products faces threat of expulsion as FSC member

Last Updated Feb 4, 2016 at 3:20 pm EDT

MONTREAL – Resolute Forest Products is facing the threat of expulsion from the group that manages a widely used international forest certification system.

The Forest Stewardship Council said Thursday that its international board will decide in March whether to recommend that its 800 members vote to remove the Quebec-based company, the second-largest holder of FSC certifications in North America.

Director general Kim Carstensen said it was considering the move after verbal attacks by Resolute, which has rejected an FSC proposal for mediation to find peace among producers, First Nations and environment groups.

“Over the last months, we have repeatedly tried to open the door for constructive engagement from Resolute, Carstensen said in a news release.

“Instead, Resolute (TSX:RFP) has made derogative comments and attempted to instill public distrust in our system. This behaviour is contrary to what is expected from FSC’s members.”

Expulsion would be a first for 22-year-old organization, said FSC Canada president Francois Dufresne.

However, he noted that losing membership doesn’t necessarily mean Resolute’s forests would lose their FSC certifications.

Resolute CEO Richard Garneau said it was disturbing that FSC would consider removing his company’s membership because it has objected to whether the organization should involve itself in a forest system that is ultimately controlled by provincial governments.

“If they decide that they don’t want to have a company that is a leader in sustainability…I find it really surprising,” he said in an interview after Resolute posted its worst financial results since restructuring in 2008.

He accused FSC of siding with Greenpeace by including its environmental rival in the proposed mediation process even though only the Ontario and Quebec governments can resolve issues with First Nations and caribou conservation plans.

Quebec has said it won’t participate in FSC’s mediation process.

Forest Minister Laurent Lessard recently said he’s concerned about the capacity of forest companies to maintain certifications because of more rigid requirements imposed on them from markets, environmental groups and the FSC itself.

He told a European conference in December that FSC’s proposal regarding intact forest landscape is not applicable in Quebec and “could be absolutely devastating in economic terms for us.”

Greenpeace spokesman Richard Brooks said the loss of FSC certifications would be very serious for Resolute, whose forests are also certified by other organizations.

“That would be a significant blow to their ability to market their product as responsible and sustainable and I think a good number of their contracts with big customers depend on them being able to supply FSC certified product,” he said.

Resolute Forest Products posted a US$214-million net loss in the fourth quarter as sales dropped 15 per cent to US$894 million.

“We certainly have the benefit of currency but it’s far from enough to compensate for the really significant decline in pricing,” said Garneau.

For 2015, the company lost $257 million on $3.64 billion of revenues.