Audit Slams SGS for Breaches in Granting Ernslaw’s FSC Certificate

A new report by ASI - which is connected to FSC International - has identified several "major non conformances" in the way that SGS's New Zealand offshoot has audited Ernslaw One over 5 years.

Wed 28 Feb 24


A damning report has identified “major non-conformities” in the way NZ forests are managed, with the forests on the country’s east coast granted FSC certification, despite “compelling evidence” of problems.

It comes as an audit, exclusively published by RNZ overnight, that has identified “serious shortcomings” in how Ernslaw One – the country’s fourth largest plantation- managed forests over “multiple years.”

Last week, Wood Central reported that Ernslaw One – owned by the Malaysian-based Tiong family – had its FSC certification on February 2nd over supposed breaches arising from major slash events in 2017, 2018 and 2023.

Up to 400,000m3 of slash from forests in the Uawa/Tolaga Bay region were washed down hills, clogged rivers, and damaged properties – with 47,000m3 of the woody debris washed up on Uawa Beach after the 2018 floods, which, along with Cyclone Gabrielle, led the NZ government to introduce tight laws for forest slash.

Farmers in flood-hit Tolaga Bay want forestry companies to put up $100m to help clean the damage done to their stock and properties by runaway slash. They’re also considering legal action – footage courtesy of @RNZVideo.

Forestry slash has been described as “an environmental crisis in the making,” with the damage from Gabrielle so severe that the former Hipkins Government published a groundbreaking “Outrage to Optimism” report, pushing for a temporary cessation of large-scale logging, a concerning situation requiring government attention. 

Late last year, an independent assessor from overseas auditors ASI visited Gisborne to check on the forests on behalf of FSC and speak to people in the area after locals and green groups complained.

Now the audit findings, published yesterday, have found severe shortcomings in how the New Zealand-based offshoot of certification body SGS checked Ernslaw’s compliance. 

SGS is one of several certification bodies endorsed by FSC to carry out audits on NZ forests, with FSC saying that the problems and breaches concern SGS and not Ernslaw itself “and that SGS needs to show how it will improve.”

Nonetheless, SGS – also endorsed to carry out PEFC audits in the region – has retained its ability to certify New Zealand forests, whilst a second certification body, Preferred by Nature, was also signed off after it certified PF Olsen’s FSC certificates for the region.

List of problems explained

The problems identified in the report include a failure by SGS to “visit sufficient sites or to interview sufficient stakeholders and experts or to review relevant documents in four surveillance audits in 2018, 2019, 2020 and 2022”.

It also found that SGS failed to rotate the staff member carrying out compliance checks, with the same person making five audits in a row – in breach of the maximum allowable under FSC certification, which is three “to ensure checks remain impartial.”

According to Eloiuse Gibson, a Climate Change correspondent for RNZ who has reported extensively on the slash, “a theme of the audit was failures to read documents or interview people who might have shown the forests didn’t comply.”

According to ASI, by 2022 – the final audit assessed, Ernslaw One had been convicted on charges involving its forest operations in Gisbone, with SGS failing to follow up on this information.

The ASI Report states:

“The non-compliant practices were clearly outlined in a publicly available written judicial decision….and described in news stories,” the ASI report said, adding that “[SGS] did not follow-up this compelling evidence of non-conformance, and did not visit any sites in the Gisborne Region in the 2022 audit.”

It also said SGS failed to visit Ernslaw’s Gisborne forests in 2019 despite much of the area being at high risk of landslides, “the region is well known as one of the most erosion-prone landscapes on earth, and rivers in the region carry some of the highest sediment loads recorded anywhere,” it said.

“[SGS] carried out minimal sampling of sites in the three other audits – 2018, 2020, 2021 – following the June 2018 storm,” the report said.

“By 2019, the charges laid by the Gisborne District Council against [Ernslaw] were public information,” it added.

Four years after being forced to pay compensation for slash damage, one of New Zealand’s biggest forestry companies is trying to atone for it happening again by funding cleanups – But calls are growing to increase the fines on companies responsible – footage courtesy of @newshubnz.

ASI noted that SGS had several documents available that might have shown non-compliance, including a 2017 Gisborne Council investigation into forestry slash and court and newspaper reports from 2022.

“There is no indication in any of the audit reports that any of these documents were reviewed,” the audit said, adding that “based on interviews conducted by ASI, [SGS] did not interview any of the Gisborne District Council compliance and enforcement officials or legal council involved.”

The report also addressed work safety with ASI, alleging that SGS failed to detect any non-conformity with the rules in 2019 after the death of a worker, which led to Ernslaw One being convicted and fined over workplace safety.

ASI states:

“In the 2020 audit report.. [SGS] presented a table that identifies five forestry fatalities over a 4-year period from 2016/2017 to 2019/2020. All these fatalities occurred… in the Gisborne [management area]. By any objective measure, four fatalities in 5 years is an excessively high number of fatalities in a relatively small operation and represents a very high frequency. ….The safety record was described to ASI by the current [Ernslaw] Health and Safety manager as ‘horrendous – the worst in New Zealand’ and far higher than industry norms.”

ASI Audit Report – published yesterday.

In response to the findings, Manu Caddie from Mana Taiao Tairāwhiti, responsible for complaining to FSC about the certificates last year, said the findings showed “poor practice” and few opportunities for locals to get involved in the certification process.

“This is not surprising to locals but hugely disappointing,” he said, adding, “Now that we have brought these issues to their attention, expect FSC and ASI to ensure the FSC standards are now even stronger than they were the audits were conducted.”

“Consumers and business customers expect FSC standards to mean what they say – sustainable management and good stewardship of natural resources, safe workplaces and positive relationships with the communities from which FSC-certified products come.”

Part of the Oregon Group, owned by the Malaysian-based Tiong family, Ernslaw One also has a subsidiary company and processing arm, Winstone Pulp International, which manufactures lumber and pulp.

Wood Central understands that the investigation has not impacted the Winstone Pulp International business, which has an FSC ‘chain of custody’ certification.

In December 2022, Ernslaw One was convicted of damage arising from slash and ordered to pay NZ $225,000 for “serious forestry offending related to a storm event in Uawa/Tolaga Bay in June 2018.”


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