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Interview Transcript

Mitch Ratcliffe  0:09

Hello, good morning, good afternoon, or good evening, wherever you are on this beautiful planet of ours. Welcome to Sustainability In Your Ear. This is the podcast conversation about accelerating the transition to a sustainable, carbon-neutral society, and I’m your host, Mitch Ratcliffe. Thanks for joining the conversation.

Today we’re going to talk forests, wood fiber, and the circular economy. The world’s forests cover about 4.14 billion hectares, which is about a third of all the land on Earth. And they store 714 gigatons of carbon, support 80% of land-based biodiversity, and supply materials for everything from buildings to delivery boxes. The World Bank projects a 400% increase in demand for forest-based products by 2050, driven by the shift away from fossil-based materials. And at the same time, the Circularity Gap Report shows that more than 90% of materials entering the global economy are still virgin. Even as we look to forests to replace plastics, steel, and concrete, we’re losing an additional 11 million hectares a year to deforestation.

The Forest Stewardship Council, or FSC, is the best-known certification program for responsible forest management. FSC-certified forests now cover more than 171 million hectares in nearly 90 countries, and the system is unique because it gives equal say to environmental groups, social organizations like indigenous peoples and trade unions, as well as economic interests such as timber companies and retailers. For 30 years, FSC has focused on one main question: Where does this wood come from?

Today’s guest, Loa Dalgaard Worm, leads the Forest Stewardship Council’s Circularity Hub. This is a new innovation team launched in 2023 that explores what happens to timber after it leaves the forest, and how we can keep it in use longer to reduce pressure on our natural ecosystems. Loa has been with the FSC for over 18 years, working in both national and global roles. As director of FSC Denmark, she grew the group from 12 members to 140 companies and NGOs, and helped raise public awareness for FSC from almost unknown to 65% recognition amongst Danish consumers. She also played a big part in FSC’s digital transformation, and now she leads a team working on what may be FSC’s most ambitious project since it first started chain-of-custody certification—that is, redesigning a system made for a linear economy so that it works in a circular one. She also hosts the Forest for the Future podcast, which I urge you to check out. She talks with experts about topics like verifying the origin of fiber products and how the EU taxonomy affects green finance.

The Circularity Hub has published two papers with new proposals that are a first for FSC. One idea is a royalty system that would pay forest owners over time as the fibers from their forest are reused and recycled through many product life cycles. Companies would fund this by paying for verified origin data to meet ESG and regulatory needs. FSC also wants to certify reused and repaired forest products—not just recycled ones—using another new label. They’re also creating a voluntary set of tools to help companies determine if they’re using high-quality wood fiber for disposable packaging that might be better used in construction or furniture, amongst other things.

We’ll talk with Loa about how certification systems created 30 years ago for responsible extraction can change to support circular material flows, and how the royalty system’s financial model will track fibers through many product life cycles and across complex supply chains involved in the modern production environment. We’ll also look at how these proposals fit with new EU circular economy laws and delays to the EU Deforestation Regulation. Finally, we’ll discuss whether FSC can ensure fair access for forest owners in the Global South, or if it might end up mainly helping larger operations in the Nordic countries and North America.

You can learn more about the FSC Circularity Hub by visiting fsc.org/circularity. And if you’d like to contact the team, you can email them at circularity@fsc.org. So, can the world’s most trusted forest certification system become the foundation for a circular bioeconomy, and can it do it quickly enough to make a big difference? Let’s find out right after this quick commercial break.

Mitch Ratcliffe  4:50

Welcome to the show, Loa. How you doing today?

Loa Dalgaard Worm  4:52

Thank you, and I’m doing really well. The sun is out for the first time in a very long time in a very frozen Nordic. I’m in Denmark, so it’s really cold here these days. And we can feel spring coming around the corner, good.

Mitch Ratcliffe  5:07

We’re in the middle of our first snow here in Southern Oregon. So I envy you that you’ve already had winter and are about to exit. I think we’re entering it.

Let me start off with this question, kind of to set the stage. The Forest Stewardship Council was built 30 years ago for a linear economy. You wanted to track responsible extraction and use of wood fiber, and you have these consumer-facing labels on paper and other products that a lot of our listeners are familiar with. But what I wanted to know is, how is the organization and its membership changing as you enter the era of circular economies of wood fiber?

Loa Dalgaard Worm  5:38

I don’t really think that I would call it changing. I would more call it evolving. Actually, the mission of FSC is the same as it’s always been. We want to safeguard the forests of this world for the present and future generations. So as consumption increases and more and more of us are looking towards forests, we need to make sure that we can still keep that promise, and that means having to add new services to the FSC systems, new business models, new tools, so that we can ensure that fiber stays in use for longer, so that we can get to a stage where we are not over-utilizing our forests, but we have healthy ecosystems, and that the people that depend on forests are thriving too.

Mitch Ratcliffe  6:23

Talk a little more about making fiber go longer. Each time we use or reuse fiber, it gets shorter and so less resilient and able to support the use. What does that look like in practice? Now, how are we reusing fiber, and where do you think we’re taking it?

Loa Dalgaard Worm  6:39

Well, there’s not one way, because reuse of fiber is going on in so many different industries. So it can be anything from the paper industry, where you would normally dissolve the pulp—so you would dissolve the paper, and then you would make it into this very wet mass that you can then add new wood fibers to, and then you can create new paper. And on average, you can do that 17 times in a row before the fiber becomes too short.

Essentially, in other areas, like in the construction sector, you could take the wood element just as it is and reuse it. So instead of recycling it and taking it through a whole manufacturing process, you could actually just reuse it as it is, especially if it’s part of a construction that has been isolated inside a construction. For example, you can easily just reuse it as it is, without making it shorter.

Then you have furniture. Furniture can have multiple lives and be repaired and refurbished and reused again. And we see that for high-quality furniture already. So it’s a question of getting more of those circular loops up and running, and then designing them so that we keep the products on as high a level of quality as we can for as long as possible. So essentially, actually setting up systems that avoid shortening the fiber. That’s what we’re after, so that we can use them for longer.

Mitch Ratcliffe  8:05

What would a system that avoided shortening fibers consist of that we aren’t potentially using today?

Loa Dalgaard Worm  8:13

Well, in essence, it’s about what are the rules? Which kinds of fibers do we allow for which types of use? For example, if you have a single-use product that you know will only have a very short lifetime—that could be food wrapping, that will be contaminated by food and therefore you can’t reuse the fiber afterwards. It could be paper straws, those kinds of things where you know it can only have one life—it’s asking ourselves, what fibers are we using for that one life? What is the quality of that fiber? What is the amount of recycled content that we require in that product?

It’s those kinds of things that I think we will need to have both regulatory rules on—so legislation, essentially—but we will also need to have systems, both in terms of what do certification systems like FSC do, but also, what does industry do? What are the industry standards? How will we circulate fiber? So it’s very big and it’s very fluffy, but it’s those kind of things that we will need to start getting this more circular setup and running.

Mitch Ratcliffe  9:22

You make an important point. This is not a clear, bright, linear explanation. It’s a fuzzy, circular system that we are seeking to evolve as we continue to become a more industrialized society. So let me ask you a question about how you’re talking with industry about this. Are you positioning circularity as a way to respond to and manage that 400% demand surge that we’re expecting over the next several decades, or is this a mechanism to, in their eyes, actually reduce total extraction?

Loa Dalgaard Worm  9:52

Oh, it’s not about reducing harvest. Actually, in reality, the hardcore reality of this is that there just will not be enough. We keep pretending that forests are this infinite resource that we can just go in and take as much out of as we want, but the reality is that we’re just using up forest resources far, far faster than the forest can actually regenerate and grow new trees. And with more and more industries pivoting towards forest-based fibers—in particular, that’s anything from the construction sector to the textile industries to even the car industry—all of them are looking towards forests because they have to replace their fossil fuel–based products. So we know that the demand is only going to go up. You’ve mentioned the number, the 400% increase. That’s the projection from the World Bank.

So we just need to be realistic about this and have ends meet, in essence, so that we don’t get to a point where we’re taking out trees so fast that the ecosystem can’t keep up. Because if we’re taking out trees from the forest faster than the ecosystem can keep up, that forest will be much more vulnerable to all of the climate-related events that it will also have to withstand. So the forest fires, the droughts, the beetle attacks, et cetera. If the ecosystem is weakened, it can’t withstand those other alternative threats that it’s going to be exposed to.

So for me, it’s just common sense. We have to get to a point where we are on a level of harvest that the forest can withstand, and we can only do that if we circulate fibers more and if we take better care of the things that we have. And the thing is, we used to be able to do this. If you look back to the ’30s, the ’20s, the ’40s, the ’50s, we knew how to repair things. Our parents knew how to do this. My grandmother knew how to mend all of her clothes. My father knew how to repair a broken radio or a bicycle or a light. And it’s an ability that we lost because of just an abundance of access to things. So we need to get back to being able to have those circular loops and being more respectful about the resources that we are getting, and that is both as individuals and as societies.

Mitch Ratcliffe  12:13

That’s such an important point—that we know how to do this, that we’ve done it before, but we’ve been trained out of this. How do you see FSC—and you mentioned this earlier—coaching people on the effective ways of making fiber last longer? Is this going to be a big messaging undertaking? Is it better labeling? How do you describe that challenge?

Loa Dalgaard Worm  12:35

Everything at once? Yeah, it’s everything at once. It’s both how we communicate, how we position the value of forest products, how we position the value of a healthy ecosystem, how we reintroduce pride in repairing stuff and keeping things in loop. But it’s also a question of, what do we have in terms of our standards? How do our standards support companies and encourage companies in setting up circular business models? How do we guide companies to moving towards more products-as-a-service, where it’s not the actual product that you sell, but it’s the service that the product gives? How do we create tools that make that transition easier?

So it’s a lot of different elements that we have to provide, and it’s for a lot of different audiences. People often come to me and say, “Well, nobody’s asking for circularity, so therefore it’s not a thing. People don’t want FSC to work on circularity.” And then I say, “Well, they want us to safeguard ecosystems. They want us to support them in upcoming regulation on extended producer responsibility, for example. They want us to help them adhere to the waste directives that are coming out, not only in Europe, but also in Latin America and North America in some states of the US, and it’s also there in Canada. They want us to help them figure out how they’re going to handle the fact that they can’t get the same amount of raw materials that they used to be able to just buy from any of their suppliers that they wanted, because all of a sudden half of it is gone in a forest fire. They want us to take care of all of that, and all of that is very closely tied to circular economy.”

Mitch Ratcliffe  14:17

An important point too is that it’s going to get more expensive as resources are strained, and that seems to be the underlying driver. But then you get back to the question of, how do you certify reuse? And you’ve got—it’s no simple task. It requires a royalty system for forest owners, recognition of non-forest bio-based fibers blended with bio-based fibers, cascading use tools—you know, in other words, things to track that fiber through multiple uses. What’s the state of the technology? What of those things are on track to have an impact in the next half decade, for instance?

Loa Dalgaard Worm  14:53

Oh, many of them are. Some are, of course, much more doable than others. So for example, the lowest-hanging fruit for companies in FSC is to introduce circular business models into our chain-of-custody standard. That standard covers 70,000 companies around the globe already. So if we enable in that standard that they are able to do take-back, or they’re able to do repair and leasing, and we guide them and give them best practices as to how they can do that—well, that’s very easy and straightforward, and in fact, we’re doing that already. It’s in consultation right now, set to be implemented by the end of this year.

The other one that we’re also already working on is, what is the role of agricultural residues in FSC-certified products? So could we enable agricultural residues? Think wheat straw. Think rice husks—so the shells around rice. Think coffee chaff—from after you’re done with producing coffee, you have all the silver skin lying back. All of that is being used right now primarily for local energy production. What if all of that could actually replace virgin forest fibers in all of the pulp-based products? What if we could require that that was certified to a credible agricultural standard, and we could then give it a different value? That’s what we’re also building a framework for right now, and we’ll be piloting so that we could enable those products to have a longer life, while also reducing the requirement or the demand for virgin forest fiber, and therefore reducing pressure on forests. So those are some of the really low-hanging fruits.

Then, of course, the whole cascading principles, which is for a lot of people a tricky word—because what does that mean? In essence, it means, how do we make sure that fibers stay in as high a quality for as long as they can possibly be? It’s quite easy when you explain it as: if you think of a wooden log, how can you keep that wooden log in long, long timber beams for as long as possible before you break them down into smaller pieces of wood, then into wood chips, potentially, then into fiber pulp? Essentially, because once you’ve broken them down, you can’t put them back together.

That is a more tricky thing, because we don’t have rules in FSC right now about what we do on this. So essentially, you could, if you wanted, take a tree straight out of the forest and make it into wood chips and burn it for energy production. So one of the things that we’re looking into is, well, how can we create incentives so that isn’t the way that it’s done? How can we create tools that would enable companies to actually communicate to their supply chain which type of fibers that they want and which kind of quality, so that it matches the type of product that they’re creating—both in terms of what are the technical specifications of that product, like what is the strength of the fiber that they actually need in the product for that product to perform well, but also, what is the expected lifetime duration for that product? Because if it’s a very short-lived product, we shouldn’t be using very high-quality fibers to produce it. And then, of course, also, what would the role be of recycled fiber in those particular products? And should there be rules? Should there be incentives for increasing the use of recycled fiber in them? So all of these things are things we’re working on right now.

Mitch Ratcliffe  18:26

Let me double-click on something that you were just talking about—this notion of the producer, the initial producer, benefiting over the course of many generations. And that royalty concept, I think, is really one of the most novel things that is called out in the papers you shared with me. It envisions a forest owner—a Weyerhaeuser or Boise Cascade, for instance—thinking of a tree as an annuity, to a degree. But then there’s this challenge of how you track it through the entire life cycle, which in my mind is a lot like some of the discussions we’re having about intellectual property in the age of AI. This stuff kind of has a tendency to disappear into the industrial economy and be forgotten. But this royalty system—how can that be implemented? And what’s the incentive for a company to pay the fee that creates the annuity for the original producer?

Loa Dalgaard Worm  19:22

So first and foremost, maybe we need to back up a second and explain what the royalty system is, because I’m assuming that the listener won’t actually know. So the royalty system is the most pie-in-the-sky concept that we have in the things that we’re working on. So this is my baby, my big dream. I don’t know whether we will ever be able to implement it, but I really want to get there.

So essentially, what the concept is, is that we are right now paying forest owners only for harvesting trees. But in reality, they’re taking care of so much more. When they’re managing their forest sustainably, they’re making sure that the ecosystem is healthy. They’re protecting biodiversity. They’re protecting wildlife. They’re taking care of a lot of social elements—for example, indigenous peoples’ rights as part of that forest management. But we don’t pay them for that. We don’t reward them for all of that work, all of what they’re doing that actually helps us fight climate change in quite a significant way.

So the whole concept is, if we imagine a world where fibers are circulating for more than one use, what would the incentive be for a forest owner to actually maintain their forest healthy, because we only pay them when they cut the tree? Well, what if we could pay them every single time that product—the fiber from their forest—goes through another use round, another recycled loop, or another reuse loop? What if they could get a small fee as a token for their continued protection of that forest ecosystem and the social safeguards? That is the big dream, the overarching concept.

You’re then asking, well, why would companies pay for that? Well, because companies are faced with increased legislative requirements, not just in the EU but globally. We see bioeconomy frameworks, we see extended producer responsibility. We see waste and resource management requirements. We see social compliance data being required from them. Green claims—which is, how are you promoting your products? We see requirements for product data and origin data as part of digital product passports. And on top of that, we see an increased amount of required data from impact investors and from sustainable finance.

So if you’re using a secondary product—something that has already been in use once—how would you know all of those core data points, unless you have some way to get access to them? So the whole theory is that these companies would be willing to pay a small fee for access to the origin data about that product. That could be data about the social compliance, pesticide use, chemical use, the origin, the status of the biodiversity where it originates from, et cetera. So that would be things that they would pay a small fee for into an automated system, and the fee that they pay then actually goes back to the forest owner as a payment for their continued protection of the forest.

Mitch Ratcliffe  22:29

So in the long term, obviously the price of wood fiber is going to increase. It just does. But by paying this fee, we can reduce the pace at which the price rises—is that the basic mechanism that we’re talking about?

Loa Dalgaard Worm  22:46

No, I don’t think so. Not necessarily, no. It doesn’t actually have to do with the first use round. What it would be doing is that you introduce this fee, and it gives an additional value for the forest owner to safeguard the forest over time, but it also removes a very big data barrier for the company who pays the fee. And we’re not talking large fees here. The whole concept is that it should be very, very small, so it should still be worthwhile for the company buying access to the data to pay that fee. So it’s similar to the FSC fees that we have for certification today, which is also only a fraction of their annual turnover for the wood-based products.

So the fee should be small enough that you would pay for access, but when you aggregate that over all of the times that the forest has harvested, then it also becomes a significant sum for the forest owner. So that’s the whole concept—that’s not actually meddling with the price for the raw material in the first instance.

Mitch Ratcliffe  23:53

Okay, we have opened—well, let’s call it an FSC-certified box—and there’s a lot inside. I think we’ve laid the foundation for the rest of the conversation, but folks, we’re going to take a quick commercial break and we’re going to be right back. Stay tuned.

Welcome back to Sustainability In Your Ear. Now, let’s get back to my conversation with Loa Dalgaard Worm. She is Circularity Hub Lead for the Forest Stewardship Council. Loa, what we’re describing is FSC acting as a central data hub and a payment facilitator in this royalty environment that you’re describing. Basically, you become a platform company as well as a certification body. So the question I’m wrestling with is, how do you make sure the platform costs don’t ultimately consume the fees that are intended to become the royalty payments for forest owners?

Loa Dalgaard Worm  24:43

Well, the truth is that we are already, as FSC, on this trajectory of becoming a platform company. So we have a lot of the infrastructure already. We already run FSC Trace, which is a blockchain that can carry all of the data points that I was talking about before. We also already do earth observation and fiber testing. So we’re already collaborating with partners like World Forest ID, who is the leading entity in the field of doing fiber testing and forensic testing of where fibers come from. We already do work with Esri, who is an earth observation company.

So what we would need to build on top is the payment system and the automated systems. And as I have pointed out before, this is just a big dream. So I don’t know whether this will be a reality, whether we will succeed in the end. And I’m very much aware that we will need the right people around the table to help us build this elegantly so that we don’t see admin costs eating up the whole thing. Because for me, this is very important, but actually that is what I’m least worried about. It’s not that cost will eat it up.

I think actually one of the things that will be more tricky is getting forests around the world mapped with isotope testing in a grid that’s fine enough for us to tell where a product likely comes from in a second or a third loop. So let me explain that a bit.

If you think about forest-based products, the easy ones are like the chairs, the tables, where it’s solid wood, and those you could just slap a barcode on, and once they’re being reused, you can scan that barcode, and it’s not that difficult to figure out where it was from. But if you have a mixed-fiber product, or if you have a pulp-based product, that means that you have reduced the fiber into being very, very short pulp segments. If you then need to figure out in the second or third loop which forest actually delivered pulp into this product, you will need to do fiber testing to figure out where it came from, and you could do that through what is called isotope testing.

Every living thing on this planet, even plants and animals, have isotopes in them. We also have them as human beings. And the beauty of isotopes is that roughly every 15 kilometers they shift slightly, which means that if you have enough samples from around the globe, that sort of creates a grid of what an isotope looks like in every single 15-kilometer grid of the globe. Then if you do a test of a product, of a fiber batch, then you can tell what isotope shows up there, and where it belongs on the globe.

And for me, getting that fine grid of the reference samples—that’s the real challenge. That’s where we will really need to roll up our sleeves, because there’s nothing even close to it. And the beauty of it is that if we manage to create that grid, we could not only implement the royalty system, we could also make that grid available for all of the competent authorities—the authorities around the globe—to help combat illegal logging, because all of a sudden you could see where forest products are coming from, and therefore whether they are from an illegally logged area.

Mitch Ratcliffe  28:01

There’s a lot of benefits in this. Are these technologies proven only in the lab, or are any of them in use in the field now?

Loa Dalgaard Worm  28:09

No, they’re already being used and have been used for quite a while. So I mentioned World Forest ID. They’re the leading entity in this. FSC helped institute them, I think five or six years back. But even before then, these technologies were being used very widely. So big companies use them to test whether the products that they’re buying, especially from some regions in the world, are actually from where they’re said to be, and that they’re actually containing the type of forest-based fiber that they’re set to contain. So for example: Is it the species that I’m thinking that I’m buying that I’m actually buying?

Then authorities are also using it for law enforcement around the world already. So that could be from the American Lacey Act, which has a lot of different wood species that you cannot import into the US. It could also be the Australian ban, which is also a ban on specific species that cannot be used in Australia. And then there’s the European Timber Regulation, which requires that you know what type of species is in your products before you place it on the EU market, and they’re already using them in their everyday operations.

Mitch Ratcliffe  29:16

That’s really good to hear. We have the technologies. It’s organizing the information, as you’ve described, that’s the key. You know, I visited the United States Forest Service Forest Products Lab last year, and one of the things that they were showing us was compressed wood products made from a lot of scrap. I can imagine the kind of tracking you’re talking about for early in the multiple-reuse life cycle being pretty easy to identify, but when things get mixed up, like the fibers in paper—will this also be applicable?

Loa Dalgaard Worm  29:47

Yeah, see, and that’s the tricky part, right? So the easy part will be for us to start out with the solid wood products, and the benefit of doing that is it would also benefit the forests of the Global South, where we really need this system up and running as fast as we can to safeguard those forests from deforestation, because a lot of those fibers end up in solid wood products.

For the fiber products that you talk about—so paper or compressed wood and fiberboard, et cetera—it’s more difficult. What we are contemplating there is, well, what if it isn’t this exact forest that we can track back to, but it’s this region, it’s this approximate area? Because we can tell that. It’s just that for paper products, it might be a thousand forests. But what if we could create a system where the fee that you get is proportional to the likelihood that part of the product was delivered from part of your forest, essentially? So that it becomes more of a credit system or a mass balance system in the end—which, and maybe we would need a combination of both—so that there’s still a better, bigger benefit for the ones who have solid wood products. But that’s a lot of the stuff that we have to figure out. Like I said, it’s early stages. We’re still in dreamland for this one.

Mitch Ratcliffe  31:05

It is, but that probabilistic analysis that you’re describing is what we’re working towards with quantum computing as a processing platform for this kind of information. It’s interesting to think about whether or not we’ve already been inventing the solutions to the problems we have and just haven’t found the applications for those solutions yet. You’re describing one that I hadn’t thought of before.

Loa Dalgaard Worm  31:26

I hadn’t thought of quantum computing in this context either, but it’s really interesting.

Mitch Ratcliffe  31:32

One of the assumptions that I hear in the conversation and in the papers that I read is that transparency requirements are going to continue to get more stringent. But the current regulatory momentum in Brussels may shift, and obviously in Washington, it already has. How robust do you see the business case for these solutions if the regulatory tailwind stalls?

Loa Dalgaard Worm  31:54

Well, there’s a very—perhaps a subtle but a very important—detail about the deregulation that’s happening right now. Because it is true that we’re seeing deregulation happening and seeing a lot of legislation being changed or pulled back or adapted. But what we’re seeing being adapted through deregulation is very much focused on what we can call the “do good” regulation—so the ambitious regulations that are pushing the world in a more sustainable direction. That is very unfortunate. They’re being impacted big time right now and being dismantled in many different regions, many different countries of the world.

But at the same time, we have a geopolitical situation which means that every single region of this world wants to become resource resilient. They want to be self-reliant, both in terms of their financial stability and in terms of their trade, but also in terms of their access to raw material and the continued ability to produce the goods that are needed in a given region. That creates a very strong push for circular business models. So that could be recycling, that could be reuse, it could be looped material, raw material handling, so you have to use products again and again. And we’re seeing more and more legislation coming up pushing for reuse.

But when you reuse the product or fiber the second time, you still need to know that it’s safe. You need to know that it’s not from illegal sources. You need to know that it hasn’t contributed to human rights violations, and you need to know which kind of pesticides and chemicals were used in it. And those are the legislations that we are actually seeing being firmed up right now and implemented faster right now, instead of being removed. So the whole transparency rollback actually isn’t happening for these types of more circular loops.

Mitch Ratcliffe  33:46

You point out in the papers I read, too, that there’s at least a dozen EU regulations or global standards that the royalty system could actually support and streamline compliance reporting for. And that, of course, is what a lot of companies are looking for—greater efficiency in that kind of reporting. But there are stalled regulations as well, like the EU Deforestation Regulation, which would require you track the wood coming into the continent. Practically speaking, what are the specific reporting burdens that you can help reduce by adding this data to the circular economy information flow that we’re trying to build?

Loa Dalgaard Worm  34:23

So the whole beauty of what we’re trying to do here, both with the royalty system but also with the circular economy module that we’re looking into—with the FSC, we have an EUDR add-on module which is called the regulatory module. And the beauty is that a lot of data points that companies need for adherence to these legislations—and it’s not just European ones. I gave European examples. It could also be the new Brazilian Circular Act. It could be the Mexican new legislation that was just enforced here in January—a lot of the data points that they’re asking for are data points which we’re already monitoring.

We already have audits in every single forest, in every single factory that is working with FSC. But what we don’t have is a system for connecting those data points with the product that is then again tied to an origin. So in other words, we don’t have a fiber test which can already prove—or, it’s not that we have the fiber test, but it’s not a systemic part of our system—that can prove automatically that this piece of timber came from that forest and has been exposed to these chemicals or to these pesticides, et cetera. And here is the audit report that shows how the workers were fairly paid or safe, and that no indigenous peoples were harmed and that they gave consent to their land management.

So that’s the piece that we’re missing—that we need to have that system. And if we have that system for the first use case, which is what we are implementing with FSC Trace and with the regulatory module, we really are very close to being able to also use that system for multiple use cycles. Which means that the admin burden for the companies is actually relatively low, because a lot of the data points are things that they’re already giving to us as part of their annual audit. We just have to use it better and put it to more uses than we’re doing today.

Mitch Ratcliffe  36:27

We’re building a very complex network. And obviously you and I are speaking halfway around the world, but in the Global North. And as I think about what you’re saying—how do we ensure that we don’t create a mechanism that primarily benefits the well-resourced forest operations in the Global North? I mean, will you have a subsidy or a low-cost onboarding solution for organizations and communities in the Global South to help them participate in this economic opportunity?

Loa Dalgaard Worm  36:54

So this is one of the key focus areas of FSC as such, and something that’s really close to our hearts—how do we constantly have alternative ways so that we don’t add a burden for the Global South, and that we give them access, and that we have something that’s attractive all around the globe, not just in the more digitally driven Global North?

The reality is that right now, most fibers actually don’t travel continents. And in the future, with the geopolitical situation, I don’t think that they will travel continents more than they do today. So there are some things that FSC won’t be able to fix. In terms of Global South–Global North, we need to have stronger legislation and stronger enforcement, especially in the Global South, to safeguard the ecosystems there even more.

But what we can do as FSC is we can make systems that automate as much of the data requirements and data gathering as we can, and that do not add on additional data elements—like the ones I was talking about before—that we need to utilize what we’re actually already out there gathering. And then I think we need to really think about the fact that we have boots on the ground every single year as part of our audits. How do we utilize those boots elegantly? How much of the data could an auditor actually contribute as part of the audit, instead of asking the forest owner or the company in the Global South to do it, unless their systems already do it?

Because let’s not stigmatize and say that everyone in the Global South is not using computers and doesn’t have elegant systems. Some of them are more advanced than we are. But for the ones that are small, the ones that are community-driven, the ones that are much more analog—and where this is difficult—well, what is the role of the auditor who’s there anyway to help ensure that that information gets on the systems that it needs to get on?

Then, of course, a lot of it is also about making it mobile-first. Because while they might not have fancy LIDAR systems and earth observations and integration with harvesting machines, et cetera, like we see in the Global North, all of them have cell phones. So how can we make sure that the cell phone, the smartphone in their hand, can be actually utilized to access the very same systems in an elegant way that does not require a lot of additional time, but gives them access to the benefits?

Mitch Ratcliffe  39:28

You’re correct. There are a lot of communities in the Global South that leapfrog the hard-wired infrastructure that the North built first, and therefore are ahead of us in a lot of ways. But could I have a couple more questions on that? They require an impressionistic answer. And the first is, can you describe a program that would support an indigenous community working to care for their forest and its biodiversity? How would that potentially be enabled by the system that you’re building?

Loa Dalgaard Worm  39:57

Well, in many senses, the indigenous communities are already doing what we’re asking for. They’re safeguarding 80% of the remaining biodiversity that we have on this globe, regardless of the fact that they’re only 10% of the population. So they are already taking care of the ecosystems in a way that all of the rest of us are not doing.

What we have in FSC is we really have an embedded adherence to the concept of free, prior, and informed consent, which is actually a human right, but we’re one of the few entities actually enforcing it—making sure that indigenous people are not only informed about what is going on on their land, but that they’re done so in advance, before something happens on their land, and that they give consent and also have the right to withdraw that consent.

Well, what if these systems could also make sure that we capitalize what they’re already doing on the ground? The way that they are protecting the biodiversity—what if we could get more of the data and the impact and learn from them, and take some of that learning and use it in other forest areas around the world, which is something that we’re not totally bad at doing? So what if we could learn from some of the data elements that they have, and that they have the exact same access as the rest of the forest owners, the rest of the stewards, to some of the fees that are being paid back? It won’t be a silver bullet, but at least we could give some more payment for the protection of ecosystems that they’re already stewarding on behalf of essentially the globe.

Mitch Ratcliffe  41:44

That’s a very forthright answer. I appreciate it. It is such a challenge to integrate the kinds of indigenous understanding of the environment that we lost because we have treated the environment as something separate from us—that these indigenous communities continue to preserve. You’ve been very generous with your time and your thinking. One last question: How would you describe a fully circular fiber economy changing global supply chains, and when do you think that becomes common?

Loa Dalgaard Worm  42:16

Well, it really depends on what we mean. Because fully circular global supply chains can come in many shapes and forms.

Okay, well, if you’re asking about the royalty system, which I know is one of the things that you’re really interested in—I do hope that we have something to pilot within the next two years and can make it into a more mature concept at our next General Assembly in FSC in three years, for debate. Because FSC is a membership-driven organization, so everything has to go to debate there before we implement at scale.

But the royalty system isn’t the only thing that can push for this shift towards circular supply chains. It’s just a small fraction of what we’re doing. So if you’re asking more broadly about the way that the world uses fibers and how we view fibers, I think if we had this conversation in five years, we would have a fundamentally different perspective on fiber use, fiber value, and how we so easily throw things out right now. I think in five years, that will be fundamentally different, both from organizations but also from consumers.

I think that global supply chains will be forced to look much more locally when they’re focusing on fiber sourcing. And they have to really both use more local fibers and look very carefully into redistributing and enabling closed-loop systems, because geopolitics is just pushing very rapidly in that direction. So it’s going much faster than anybody was expecting.

So I think if we look ahead just within a year, we will start seeing these circular business models having an uptake in FSC. If we look five years ahead, hopefully all of our different initiatives that I’ve been talking about today are either in pilot mode or implementation mode, so that we can become an enabler for a circular economy. And for me personally, that is the end goal. We have to enable a circular economy so we can reduce pressure on forests, so forests can help us fight climate change, and we have a realistic chance of having a climate that we as human beings can survive in.

Mitch Ratcliffe  44:42

Loa, I hope that all of that is something that comes to pass. Thank you for your time today. It’s been a fascinating conversation.

Loa Dalgaard Worm  44:48

Well, you’re most welcome.

Mitch Ratcliffe  44:56

Welcome back to Sustainability In Your Ear. You’ve been listening to my conversation with Loa Dalgaard Worm, who is the leader of the Circularity Hub at the Forest Stewardship Council. Her team is taking on the biggest expansion of the FSC mission since the chain-of-custody certification program it started 30 years ago. And to find out more about the Circularity Hub, you can visit fsc.org/circularity, or contact the team by email at circularity@fsc.org.

We heard one thing clearly in this conversation, something that’s reiterated by many of our guests: data can help us plan and transform the economy. We can see into the complexity that we’ve created around ourselves and, to a degree, are being carried away by. The future of materials, forests, and the circular economy depends on data platforms that can help manage information about everything that we produce and use, and that—at least until now—we throw away.

The economics of forest fiber won’t work under the current linear system, and the cost is rising. You can see it everywhere. For example, the Trump administration recently announced plans to open old-growth forests in Oregon to logging. We are literally preparing to mow down the last reserves of biodiversity in the United States. This is insanity.

Loa is right. We act as if forests are endless resources, but we’re taking fiber much faster than forests can recover. Weakened ecosystems cannot withstand the fires, droughts, and beetle outbreaks that are being made worse by climate change every year. This outdated way of thinking from past centuries is leading us toward disaster. We have to face this reality in our supply chains. If industries don’t start reusing, repairing, and recirculating fiber, they will run out of the material that they hope will replace plastics. The sad truth is that if the green transition doesn’t face up to this problem, the forest loss will actually accelerate, because we haven’t changed the basic economic models behind reuse.

Loa’s idea for a royalty system is one of the most creative approaches that I’ve seen in certification design. Right now, forest owners are paid only once, and that’s when they cut down a tree. The royalty idea would give them a small payment each time fiber from their forest is reused, whether as solid wood in construction, repaired furniture, or as paper that’s recycled many times. Loa called this her “pie-in-the-sky” idea. But tracking technology is advancing fast. FSC already uses a blockchain-based system called FSC Trace, works with the World Forest ID program to use isotope testing that can pinpoint a fiber’s origin to within about 15 kilometers, and partners with Esri to improve earth observation systems so we can predict forestry outcomes instead of just reacting to what happens.

For solid wood, tracking through several uses is fairly simple. The real shift is moving from just enforcing rules and catching illegal timber—which is always going to be needed—to actually rewarding the ongoing care that keeps forests healthy. FSC needs to make sure that incentives reach the Global South too, or the circular economy could end up mainly helping large forestry companies in the North.

Because of geopolitics, fiber sourcing is shifting toward local and regional supplies. Countries are putting up walls, so most fiber will stay within continents. FSC can support inclusion for indigenous peoples by automating data collection to avoid creating extra work for local communities, using existing auditors to gather information that small or community-run forests can’t easily digitize, and by creating mobile tools that work on smartphones. Indigenous peoples already care for 80% of the world’s remaining biodiversity, and they don’t need lessons in circular forest management, because they’ve practiced it for dozens of generations. But the royalty system Loa is developing could finally pay those communities for their stewardship, instead of treating it as a free benefit to the global economy—which corporate finance so loves to overlook.

So here’s what I want you to leave with after this conversation. Loa said something that I think we all know but too often ignore due to the industrial way of thinking: we once knew how to live in a circular way without sending so much waste to landfill every year. Our grandparents fixed clothes. They repaired radios. They kept things in use. FSC’s circularity work aims to rebuild the systems we need to relearn reuse and repair.

The question is whether FSC’s royalty system will move from idea to pilot within Loa’s two-year goal. That will show whether or not certification organizations can adapt quickly enough to help create a circular bioeconomy, instead of just recording the failure of the old, wasteful system. The ambition is there, the tools are ready, and the real question is whether institutions and markets will act fast enough for the forests.

So stay tuned. We’re going to have more discussions about this, especially about the solutions that can make a difference on Sustainability In Your Ear. And I hope you’ll take a moment to check out our archive of more than 540 episodes, because there’s something here. We’re in our sixth season, and I guarantee you that there’s an interview you’re going to want to share with one of your friends. Writing a review on your favorite podcast platform will help your neighbors find us. Because folks, you are the amplifiers that can spread more ideas to create less waste. Please tell your friends, family, and co-workers. They can find us on Apple Podcasts, Spotify, iHeartRadio, Audible, or whatever purveyor of podcast goodness they prefer.

Thank you for your support. I’m Mitch Ratcliffe. This is Sustainability In Your Ear, and we will be back with another innovator interview soon. In the meantime, folks, take care of yourself, take care of one another, and let’s all take care of this beautiful planet of ours. Have a green day.

The post Sustainability In Your Ear: The Forest Stewardship Councils’ Path to a Circular Bio-based Future with Loa Dalgaard Worm appeared first on Earth911.

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