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Wal-Mart's "Forest Crimes"

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If a tree falls in the forest, will Wal-Mart hear the sound?

Apparently not, according to an environmental investigative report released this week on Wal-Mart's unsustainable timber procurement practices. The new study says Wal-Mart's "good wood" procurement policy only looks good on paper.

Last month, Wal-Mart released a 59-page "Sustainability" progress report, in which the company said "we want to provide our customers with the assurance that not only are they getting value and quality, but they are getting a product that was produced in a socially responsible manner." But the retailer's wood procurement policies are basically all bark, and no bite.

Wal-Mart sells wood products ranging from furniture, to picture frames, candle holders, tooth picks and popsicle sticks. The typical Wal-Mart supercenter can carry more than 900 different wood products. Wal-Mart tells the public that "an area of forest the size of a football field is cleared every second. That's 86,400 football fields a day. In tropical forests, it's estimated that 50,000 species become extinct each year because of deforestation." The retailer has a "Forest and Paper Network" that seeks to get its suppliers to convert to certified wood, and to give preference to suppliers who can verify the use of sustainably harvested wood fiber. "When we discover sustainable factory issues, we are committed to seeking alternatives," the company says, "or even removing products from shelves."

Based on this pledge, the Simplicity corporation should expect a call any day now from Wal-Mart, pulling Simplicity's wooden cribs from its shelves. An undercover study released this week by the Environmental Investigation Agency (EIA), a non-profit research agency based in Washington, D.C., says that despite the company's rhetoric about sustainable wood products, "Wal-Mart is turning a blind eye to illegal timber sources in its supply chain which threaten some of the world's last great natural forests."

According to EIA, Wal-Mart does not ask its suppliers where their wood comes from, and the retailer's 'don't ask' policy "is having particularly dangerous consequences for the high conservation value forest of the Russian Far East and the endangered species dependent on them, including the world's largest cat, the Siberian tiger.

Roughly 84 percent of Wal-Mart's wood products, like cribs and toilet seats, are sourced from China, and much of China's lumber is imported from Russia, where as much as 50 percent of the logging is illegal. EIA undercover investigators met with 8 Chinese manufacturers that supply Wal-Mart with wood. EIA asserts that Wal-Mart is focused only on price, and "has not concerned itself with the origin of the timber used for its products." Wal-Mart's supply chain "will contribute to the depletion of Russia's 'protected' forests unless concerted changes are made," the EIA warns.

One supplier EIA examined makes over 200,000 baby cribs for Wal-Mart every year from Russian poplar and birch. EIA employees, posing as wood buyers, learned that Wal-Mart suppliers admitted to paying protection money to the Russian mafia, and to illegal logging. Almost comical is the fact that logs coming into China from Russia have to be offloaded from the railcars, and reloaded onto Chinese railcars, because the Russian train tracks are a different size than the Chinese. When Wal-Mart customers buy these wood products, they are supporting "criminal timber syndicates," the environmental group says.

Wal-Mart has pledged to "develop transparency to the wood fiber source," but EIA replies that the retailer has shown a "lack of concern" about the sustainability of its wood sourcing. Illegally harvested wood is cheaper because it bypasses environmental regulations, permits, labor laws, taxes and tariffs. Illegal lumber also has a negative impact on the American economy. In 2004, illegal timber cost American suppliers $460 million in lost exports to foreign markets, and as much as $700 million in depressed U.S. prices.

The EIA claims that Wal-Mart's drive to squeeze the lowest price from its suppliers encourages illegal logging. "While the company has laid out strong talking points," EIA notes, "it has thus far avoided taking any firm action to eliminate even illegally logged timber from its supply chain, much less to source from sustainably harvested forests." The group says that without concrete goals and more transparency, all Wal-Mart's rhetoric about 'good wood' "cannot yet be taken seriously." EIA documents several case studies of Wal-Mart's "total inattention to the legality of their raw materials."

The EIA report calls on Wal-Mart "to commit to eliminating illegally sourced wood from its supply chain, and to implement a rigorous purchasing policy for wood products that includes auditing and tracking mechanisms." EIA concludes that "the drive for 'everyday low prices' to the exclusion of other questions has a serious cost....The type of logging pervasive in the Russian Far East damages the environment, robs the government of revenue, and promotes corruption. There is nothing sustainable about this model."

Wal-Mart admits "it's difficult to know if the products we source are coming from certified suppliers and are being made using legally sustainable practices." But the EIA says it's not enough for Wal-Mart simply to acknowledge the problem. "It is now time for Wal-Mart to commit to eliminating illegal wood from its shelves, and communicate this policy to its suppliers of furniture, frames, toys, paper and packaging and other wood products," the EIA insists. "Wal-Mart shoppers do not want to be an inadvertent party to forest crimes."

Alexander von Bismarck, the Executive Director of EIA, says, "To have Wal-Mart ignore measures that to the rest of the world seem common sense -- such as asking where your suppliers' wood is from -- has an enormous impact. It undermines the current global efforts to clean up the timber industry. When Wal-Mart fails to implement an entire category of environmental responsibility, it creates demand designed to take advantage of that. This is currently feeding the illegal logging problem." The EIA believes that Wal-Mart has within its power the ability to "limit the destruction of some of our planet's final frontier forests and the wildlife and people who depend upon them."

Today, there are more than 6,800 Wal-Mart stores around the globe (the company recently opened its 3,000th international store), but only 400 remaining Siberian tigers. That's not very sustainable odds.

Al Norman is the author of The Case Against Wal-Mart. Forbes magazine has called him "Wal-Mart's number one enemy."