Forestry giant Resolute Forest Products Inc. (RFP) has been attempting to reinstate three Forest Stewardship Council ("FSC") certifications that were revoked last month, covering forests in Quebec and Northwestern Ontario. However, in an unprecedented move, the FSC called for a six-month extension of the temporary suspension of one such certificate for Quebec's Lac-Saint-Jean area.
Per Greenpeace, an environmental NGO, the certificate was rescinded owing to a number of problems like a lack of approval from the Crees nations and inability to preserve high-priority conservation areas. According to the Resolute Forest, a dominant reason that contributed to the FSC auditors’ decision to temporarily suspend the certificates involved a complicated territorial dispute between the Cree First Nation and the government of Quebec.
The extension will serve additional time to settle the aforementioned dispute, which started in 2002. Also, the suspension will give time to the government to resolve hitches in its caribou conservation plan.
Resolute Forest has concerns about the government’s ability to tackle the problems without any major socio-economic effect on the related communities. Also, the company is vying for reconciliation of the regional and provincial caribou conservation action plans and execution of Motion 65, which was introduced by Greenpeace. Motion 65 is scheduled to come into effect at the end of 2016, and entails preservation of 80% of the intact forest landscapes.
The FSC is one of the most established eco-certification schemes for logging companies such as Resolute Forest. However, some environmental groups disapprove with the organization, alleging that it has certified some companies that have substandard environmental and social records.
Interestingly, in neighboring territories of the Lac-Saint-Jean region, similar FSC certificates have been renewed despite putting forward the same caribou habitat conservation plan that was deemed objectionable for Resolute Forest.
Resolute Forest recently renewed its certificates in the Abitibi, Mauricie and North Shore regions of Quebec successfully, and is one of the largest holders of FSC sustainable forest management certificates in Canada.
Resolute Forests presently sports a Zacks Rank #1 (Strong Buy). Other notable stocks in the paper & related products industry include Domtar Corp. (UFS), Fibria Celulose SA (FBR) and Mercer International Inc. (MERC), each holding a Zacks Rank #2 (Buy).
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