NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 11, 2000

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[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): Thank you very much, colleagues around the table. This meeting is now in session—as usual, pursuant to Standing Order 108(2), a study of Canadian forest management practices as an international trade issue.

We are pleased to have with us this morning Madam Annette Verschuren from Home Depot Canada. Her company figures prominently in some of our considerations.

I'm sure the clerk and the researcher have already given you a very brief indication of what our expectations are. You can dismiss all of those expectations and share with us your perceptions.

Typically, we give our presenters an opportunity to speak for about ten minutes, so whether they have a written brief or not is immaterial. Then we like to engage you in dialogue. Some of it is pretty straightforward, so I caution you beforehand.

Are there any questions before you begin?

Ms. Annette Verschuren (President, Home Depot Canada): I think it's very clear. Thank you.

The Chair: Okay, madam, we're all ears.

Ms. Annette Verschuren: I'm delighted and honoured to be here today. Thank you very much for this opportunity.

To talk just briefly about myself, I'm a Nova Scotian. I was born and raised in Cape Breton. Half of my career has been in public life, and the last half has been in the private sector. So I understand the balance of socio-economic issues as governments consider things. I am here today to talk about our wood purchasing policy and what Home Depot has done in terms of taking an initiative.

To give you a little bit of background, Home Depot is a $38-billion company. Its headquarters are in Atlanta. Its entry into Canada was in 1995, when it purchased Aikenhead's. Canada is part of the international operations of Home Depot. My boss is Anders Moberg, who is the president and CEO of IKEA. He is just a wonderful addition to the team. He is someone who understands and is very sensitive not only to business issues but to environmental issues.

We've taken a look at this issue over the last number of years. As part of our value system, we want to give back to the community, and recognize that companies need to take leadership roles and responsibilities. To that end, Arthur Blank, our CEO—and I want to qualify that he made this announcement in August 1999—announced that as a company, we have taken a position to purchase forest products and eliminate the purchase of three specific species unless they come from certified forest lands.

We've taken the position that we will eliminate purchases from endangered areas over a period of time. The endangered species are lauan, redwood, and cedar products. We have met with all our vendors. As a matter of fact, we have met three times with all our major vendors in North America specifically to talk about this position. We talked to them well before the statement we've made. So we have dealt with MacMillan Bloedel, Weyerhaeuser, Louisiana-Pacific, and Georgia Pacific—the companies throughout North America—on this issue. That's the key here: to work in partnership with our vendor community.

Our position is that we are going to prefer to buy products that are certified. We have taken the position that we're supporting FSC certification. I know I'll get questions about why we support FSC.

We are truly a global company. We are opening operations in Argentina. We have opened operations in Chile. We'll be going to Europe. We are a company that is expanding. We need a global reference level.

It's a business issue, to some degree. Certainly from all our knowledge, FSC certification is the highest standard out there. As a company, we feel we need to purchase products that are sustainable and recognized.

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If you don't mind, Mr. Chairman, I have a couple of personal examples; I will not go over the 10 minutes. I lived in Cape Breton during the budworm infestation, so I have a lot of personal experience of the balance of ecosystems and the impact companies can have on the environment. Walking through my farm with my dad, having to cut about 150 acres of budworm-infested wood really had a big impact on me as a child.

My husband is Dr. Erik Haites. He is an environmental economist who has done a lot of work in respect to emissions trading and the CO₂ issue. So he certainly influenced me in terms of recognizing that the sustainability of our woodlands is going to affect the air quality we all live with, and protecting that resource is key.

We are working very hard beyond what we call the lumber and building materials business today. We will have eliminated teak and mahogany from the Canadian stores by July of this year. We are taking a very hard position. We are working very closely with the vendor community. They are working toward FSC certification. They recognize this is the way of the future. We need to recognize that, as a company, we need to contribute more to our world and to our economy.

I chair the Hope Depot Environmental Council for Arthur Blank, for the whole company. I'm honoured to do that. The wood purchasing policy is one of our initiatives. We are taking it beyond. There are all kinds of opportunities in the paint area; we're reducing the oil-based paints in all of the products.

It is our obligation to help teach our merchants to understand that to purchase more environmentally friendly products will only be of benefit to our world and to our company at the end of the day. We're working very hard to make that happen. We feel there really is no negative position. Home Depot is the largest distributor of lumber products in the world today. We are the largest purchaser in the world. Our senior team is really committed to making sure we make it a better place to live. It's part of our value system. It's how we operate.

That is my presentation. As the chairman says, I'm sure it gets much more interesting when question period starts, so I invite questions.

The Chair: Thank you very much, madam.

I'll go directly to Mr. David Chatters from the Canadian Alliance.

Mr. David Chatters (Athabasca, Canadian Alliance): Thank you, Mr. Chairman.

Welcome to the committee. I'm delighted to see you're here, because you were certainly one of our chosen witnesses, and we wrote to you and in fact asked you to appear. So we're delighted to see you're here.

I certainly would like to hear the reasons you chose the FSC certification for your company, but before that, I have some real concerns with what appears to be the influence the environmental movement is having on your company and on your policies in the purchase of wood, particularly as expressed in an article that appeared in the Globe and Mail on Saturday, January 22. In it your company, a vice-president of your company in particular, says that Canada has a history of bad harvesting practices and that your company certainly doesn't want to do business with people who don't want to move forward with this. Considering that Canada has some of the best forestry practices in the world—and we went and saw it, and I'd certainly encourage you and your company to do the same—it really is quite amazing that you would make that statement.

Also, to follow up on that particular line, if you deem Canada's forestry practices, particularly mid-coast British Columbia forestry practices, to be bad forestry practices, where are you going to buy your wood to replace the wood you're not going to buy from that part of Canada, considering that 80% of your wood products in North America come from Canada?

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Ms. Annette Verschuren: There are a number of questions here, and I'll try to address them as I go along.

Number one, I don't believe we are going to reduce the purchase of wood products from Canada. I hope we increase them as a company. For instance, J.D. Irving is one of our biggest suppliers in the northeast. They sell to the U.S. I don't buy from them because of transportation and other issues.

So I just don't see that we will reduce that. Through the market mechanism of a wood purchasing strategy, I believe we will use the power of the purchase order to help encourage companies to recognize and improve their forest management practices.

I apologize for Suzanne Apple's statements. I do not agree that the forests in Canada are badly managed, but I do think some companies are not as well managed as others.

I have travelled with MacMillan Bloedel. I have been in helicopters all up the coast of British Columbia. I have spent much time with our companies throughout British Columbia. Obviously I've been with our major vendor, Donohue in Quebec. I have seen their forest management practices, and some are pretty darn terrific. They really are. But again, we will favour those companies that will take the lead in terms of improving their forest management practices.

Today there is only enough certified lumber to supply 50 stores. We have 950 stores in North America.

Mr. David Chatters: That's why I say, where are you going to get it?

Ms. Annette Verschuren: Well, I'll tell you, someone has to start. We can't not supply our customers. There's no question about that. But we will favour companies that proceed on that basis and encourage them with respect to providing incentives to them to improve their forest management practices. We've come out publicly to say that we will favour companies that supply us with FSC-certified goods.

We recognize that this is a gradual process. We really do. In terms of our thresholds, we thought, how much can we get? It's been very difficult to target how much we can get. How much can we drive the changes, though, in terms of forest management practices?

So I think it could be very positive, and all the CEOs I've been speaking with have made major progress in terms of understanding where the wood supply is coming from and recognizing that they need to improve. This is a big issue.

I want to also address the environmental groups. Last year 11% of the shareholders of Home Depot U.S. voted that we stop purchasing old growth lumber. That was 11% of the shareholders. So it's not just an environmental groups issue.

There is no question that they've been active in our stores, and we do recognize that they are part of the stakeholder community in the same way first nations are, in the same way governments are, and in the same way companies are to the process. They need to be there.

We need to do this for the right reasons. We need to do this based upon moving our company forward. In 1992 we established an environmental department. We've really worked hard in the last few years to accelerate this area of our business.

Again, though, we want to make it part of our overall business strategy, part of how we run our business. Quite frankly, it's a good business decision, because at the end of the day we need to sustain that wonderful wood product out there. We want to buy as much well-managed fibre as we possibly can to go through our stores. We have to look at alternative products. A lot of people say, look, is Home Depot going to be putting a lot of alternative products into our stores?

We want wood. It's a wonderful product. It's a wonderful natural resource, and we need to sustain it for the long term.

Mr. David Chatters: All that's very well, but are you specifically saying that Home Depot will not be buying wood from old growth forests in spite of the fact that Canada, in British Columbia, has the highest percentage of old growth forests of any country in the world?

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Ms. Annette Verschuren: Our position is that we will purchase product from FSC-certified woodlands as much as we can.

Mr. David Chatters: And FSC-certified wood cannot come from old growth forests?

Ms. Annette Verschuren: Not necessarily.

Mr. David Chatters: Okay, I had better let somebody else ask a question.

The Chair: We can come back to you. That's no problem.

Mr. St. Denis.

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chair, and thank you for being here, Ms. Verschuren.

I think part of this whole process of our committee's understanding of international trade and forest products has a lot to do with better understanding all sides of the issue.

First, on this issue of certification and just to follow up Mr. Chatters' question, I did ask one of the FSC folks last week that question—or maybe John did—about whether or not FSC certification totally forbids any certification of old growth forests. They didn't say that was the case, but that it was still an open issue. I think Ms. Verschuren's answer is consistent with that.

If I could go to FSC, there are other certification systems and they're all at various stages of emergence. Between the lines, I think you got the impression that even the FSC folks were struggling to get a handle on all of this themselves, and on their own management systems. Their ability to have people out in the field and to have a whole third-party audit system in place is all very much in a state of flux and early growth.

I see it as a danger that so much dependence is being placed on the different certification systems, FSC in particular, without the public really realizing that none of them have matured. We could be getting ahead of ourselves, so to speak. Even if all the companies were ready, I don't even know if FSC or any other system could actually certify everything to satisfy the demands of the marketplace.

I wonder if you could just talk a bit more about this. I understand you were chair of your company's committee on the environment, so you're probably the best person to answer this question. What is your opinion on the state of growth or maturity of the FSC system? Could you comment on the relationship, as you understand it, between the FSC system and the CSA, ISO, the pan-European, the American SFI or Sustainable Forestry Initiative, and any others you might be aware of? I think it would be good to get your view of that picture.

Ms. Annette Verschuren: That's a really good question, Monsieur St. Denis.

The first initiative we took was to invite all the certification people to meet with us in Atlanta. We had presentations from ISO, we had presentations from CSA, we had presentations from FSC, and we had presentations from various other certification schemes.

I agree with you, they are all in developmental stages. There's talk about the Finnish system being as good as the FSC, and there are all kinds of other issues. But as a company, for us to say we will go with CSA in Canada, and that we will go with whatever the Argentinian standard is in Argentina, we would never be able to monitor things. The standards could be different all over the world.

I think the key message here is that governments, the industry, the environmental groups, first nations...all the major stakeholders need to get together to define what the standard should be, so that we can have one standard. It's going to be very difficult for companies to operate unless there is one standard. It's a very simple position that we're taking, and we feel strongly about it.

From the knowledge we have and the presentations we have heard, in our minds and in our assessments—and I had all of the lumber merchants involved in this—it is felt that FSC certification is the highest standard. We became members of the Certified Forest Products Council about two years ago, and the council supports FSC certification.

We don't have all the answers, we really don't, but I think what we need to do is show our leadership. We need the highest standards for the product that we sell. The responsibility of being the biggest retailer in the world comes with it—a lot of responsibility for the products that are manufactured in those stores. As a matter of fact, by 2005 we will probably be responsible for distributing about 25% of all the construction products throughout North America.

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Mr. Brent St. Denis: I have a short supplementary question, and thank you for that.

I can see that getting together certainly makes sense, to have all the stakeholders working together toward a common goal for the good of the planet, somehow keeping in mind the needs of the workers in the mid-coast towns who are dependent on forest operations. But at the end of the day, we all have to be worried about the way the planet is.

I can appreciate that in the absence of a mature certification system that satisfies the needs of consumers in your company, you had to pick something and basically run with it. Do I take it that there is no built-in resistance to old growth if at the end of the day the FSC system provides some sort of sustainable certification system that includes old growth harvesting? The company doesn't have a problem with that? Whatever the FSC system matures to, you'll live with that?

Ms. Annette Verschuren: That's correct.

At the end of the day, wood fibre globally is very important, and I think we have a wonderful opportunity in Canada, as Canadians, to further develop our industry to make a higher-quality, premium product so that it can be sold throughout North America and internationally and be seen as a product of preference.

The Chair: Thank you for that.

You're the very first person who's come here and suggested that there be one certification system. The others, in my recollection, have all said that as long as you have a certification system, they can all be compatible, they're not mutually exclusive. But you are exclusive.

Ms. Annette Verschuren: I'll tell you why.

FSC is the only group that doesn't audit itself. The problem we have with some of the certification schemes is that they audit themselves. For instance, the American scheme basically says they will audit themselves. The source of supply is the key here, and we need to be confident and comfortable that the products the industry can stamp as FSC come from woodlands that are well managed. And it is an independent, third-party audit that does that.

The Chair: That might be very impressive for some, and it's impressive for me too, but you're using the power of your retailing dollar to go above governments and associations in order to impose your will. How would you have this committee recommend to its Parliament an action that might be supra-governmental?

Ms. Annette Verschuren: That's a good question.

I think, in terms of the company, we feel this policy needs to be developed so that we can get better-quality products through our stores. We—

The Chair: If I may interrupt, madam, it's not really the quality of the product that you were talking about, it's the quality of the management of the forest from which that product is derived. But it doesn't really have anything to do with what goes on the shelf. You're concerned about your obligation, your global environmental obligations.

Ms. Annette Verschuren: Correct, yes.

The Chair: But that isn't what motivated you initially—and I mean you as a corporate entity. It was what went on the shelf, not what was taken out of the environment.

Ms. Annette Verschuren: I think that ultimately, as the distributor of products, the ones who are closest to the consumer, we have a responsibility to make sure those products are safe and secure, and to recognize that we can encourage our vendors to improve.

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As another example, we took a position to get rid of lead before anyone did in the paint industry. We have reduced substantially the oil-based paint products in our stores, because we feel that's the right thing to do. It is part of our culture.

The Chair: It's part of the culture of this committee as well. I just want to make that clear. We also have the same sense of obligation to the generations that will follow us.

We have another consideration that runs parallel. One of the reasons we wanted to speak to you is that you do carry clout. Your decision to go with FSC certification may be construed by skeptics in the industry as being an additional leverage on the commercial side. As you've heard from members here and as you've already known and admitted, that is not the certification that is currently utilized by any of our industries.

Ms. Annette Verschuren: No. The whole FSC certification movement has not emanated out of government. It's emanated out of all the stakeholders.

I truly recognize that there is government jurisdiction here. Again, we take the position that we're going to be favouring FSC-certified wood products. We want companies to move in that direction. It may take five years, it may take ten years, but if there's not a start then where does one begin? So our organization, from a global perspective, took that position.

The Chair: I'm sure Mr. Cardin, who is dying to ask the next question, will feel that you're disadvantaging many of his constituents.

[Translation]

Is this not true, Mr. Cardin? I invite you to ask the next question.

Mr. Serge Cardin (Sherbrooke, BQ): Since you have already asked some of my questions, I will have less for the witnesses. This is not a problem.

You are evidently concerned by environment. How do you make sure that all your suppliers share this concern and that their development practises do not harm the environment? Do you base your assessment strictly on certification or do you check their operations on site?

[English]

Ms. Annette Verschuren: I apologize that I can't speak back to you in French, Mr. Cardin.

I think you're asking whether we're making these decisions based upon environmental reasons and not necessarily on economic reasons. I believe that in the long run, better-managed forests will be better for our country and for the industry. I know there are a lot of fragmented woodlots and landholders across Canada. We all know British Columbia has a lot of crown lands. Nova Scotia, New Brunswick, they're all different across our country.

We don't anticipate putting people out of business. Again, our position is that we're favouring and working towards that. We cannot eliminate the purchase of products from non-FSC-certified lands. We would be out of business. Our position is that we're favouring this and we want to increase the amount of certified forest products. Maybe for the smaller woodlot owners, it will take a little longer. We hope that's not the case.

At the end of the day, I think it will make our operations more efficient and sustainable. Maybe I am looking at it too much from the perspective of business rather than of the environment, but I think one is in sync with the other.

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I need to point out that we do not want to eliminate jobs. As a matter of fact, our company made an announcement that we're opening in Montreal. We purchase $700 million of products out of Quebec's manufacturing base; $600 million goes to the United States. One of the big things the Canadian operations have done is introduce Canadian manufacturers to American markets. We need security of supply of products all around the world, and what we are excited about is that the Canadian manufacturers are also very excited about going to different countries with us. And quite frankly, they're really great exporters. I am representing this country, and I think we are great exporters.

So we see it only as a positive opportunity, and I want to expand the industry as opposed to restrict it, from a personal perspective and certainly from our company's perspective. We don't want to hurt jobs or an industry. We want to encourage it and to grow it so that it will be sustainable in the long term.

[Translation]

Mr. Serge Cardin: Home Depot is a founding member of FSC. You said that J.D. Irving has been named environmental vendor of the year in 1999. What would happen if J.D. Irving withdrew from the FSC certification program? Given your relationship with FSC, is Home Depot not heading instead towards an era of Home Depot certification standards?

[English]

Ms. Annette Verschuren: Those are very good questions.

As you know, Jim Irving was our vendor of the year last year and has done a fabulous job with us and probably has the largest tract of FSC-certified lands in Canada, so we certainly want to encourage him to expand that.

I know there are issues in the maritime policy. It is very difficult for me to comment on that. I know I'm a maritimer, but I am not in a position to comment on that conflict.

We want to encourage him in terms of FSC certification. We've certainly indicated to him that we would purchase all he could have certified. He is going to a very high standard as a company. In essence, I can't argue federal-provincial jurisdiction and things like that. I think we have to keep it relatively simple and say, look, this is what we're going to be favouring in the future.

[Translation]

Mr. Serge Cardin: Thank you.

The Chair: Thank you, Mr. Cardin.

[English]

Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you, Mr. Chairman.

I'd like to get back to the subject of the little guy. There are farm woodlots; there are small operators in the province of Ontario. There are small operators who contract on tracts of crown land, and many of these woodlots and many of these small operations are incredibly well managed, because a small woodlot that's properly managed increases its yield many times over.

But the demand that the small operator, or the farmer with 50 or 100 acres of woodlot, get FSC certification involves a direct cost, and when the FSC people were here they indicated—I guess this was kind of speculative—that the cost for, say, a 100-acre woodlot would be $1,000 initially, and then there would be an annual update cost that would go with that.

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I've seen this happen in other areas of wood processing, where the small guy is told, okay, we'll look after you, because this is all it's going to cost. But that's all it's going to cost there. That's all it's going to cost grading the lumber. That's all it's going to cost doing something else. Pretty soon he can't compete with the Irvings and with the MacBlos or whoever it happens to be.

These people are significant. As the years go by, we will probably get into more plantation-type production in Canada. There will probably be a trend toward more of this kind of production. But it seems it would be a tragedy if people who are potentially excellent operators and so on get thrown out of the picture because of these burdens.

Ms. Annette Verschuren: Wouldn't the major companies be encouraged to work with the smaller woodlot owners? Wouldn't it be in their best interests? Because they're purchasing that product, and it's a lot of their source of supply.

When you talk to the majors, they harvest from their own lands and they harvest from private woodlot owners. They harvest all over. To secure my source of supply, I would think I'd work very closely with the woodlot owners to get them to reach FSC certification. I think that can be done, in the long run.

Again, this is not something we've said.... You know, we are going to favour FSC certification, but working together with industry to make that happen will automatically make the smaller woodlot owners....

At the end of the day, the most important thing is to sustain our forests for our ecosystems. We need to give back what we take out of the crust of the earth. As a company—and I'm speaking as a Canadian taxpayer and as a person who's lived here for 43 years—I think we need to move the industry to recognize that it needs to improve. At the end of the day, I just see that part of the whole process of continuing to sell lumber.

Mr. Julian Reed: I guess the question is, how do we get there? A lot of these people, as I say, probably do a better job of managing their smaller woodlots and their smaller holdings than do medium-sized or larger entities, because it's of direct economic benefit for them to do that. The challenge is, how do you keep that talent base and preserve it and so on without driving it away with economics?

Ms. Annette Verschuren: Right.

If I have a poor-performing store, I get that poor-performing store manager to work with one who does a good job in a certain area. Isn't there a way for the people who are doing it well to share those best practices in terms of improved forest management? Is there a way for the smaller woodlot operators to get together collectively to help absorb some of these additional costs?

If you drive the market in a certain direction, I believe it will result in improvements. With the combination, I believe, of the majors taking the leadership role—and a lot of them purchase a lot of product from private woodlands—I think they would encourage and work with the private woodland owners. At the end of the day, the private woodland owners are safe. They own the resource, and that product will become more valuable at the end of the day.

Mr. Julian Reed: I have one other little question, Mr. Chairman. Have I run out of time?

The Chair: I'd prefer that we went to the next round, if you don't mind.

Mr. Julian Reed: Sure.

The Chair: Mr. Godin has been really patient but he's champing at the bit.

Mr. Godin.

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[Translation]

Mr. Yvon Godin (Acadie—Bathurst, NDP): Thank you, Mr. Chairman.

First, I would like to welcome you to our committee. You have shown both concern and responsible behaviour. No one wishes for the planet to disappear. We have a collective responsibility to preserve it and to make sure that future generations, our children and grand-children, have a good future. I congratulate you on your efforts to that end.

I also went to British Columbia and visited its forests by helicopter, including Bella Coola forest. I was impressed by the way in which the forest is managed there as opposed to elsewhere. While J.D. Irving manages New Brunswick forests very well, we cannot be as proud of some other companies. I think it can be said openly.

I am the last-born of an 11-children family comprising many lumberjacks, including my father who worked in Northern Ontario and Northern New Brunswick. They lived from this trade all their life. The forest is very important to us and it will continue to be so for generations to come.

I sometimes ask myself if environmentalists will be the only ones to have a say. Who will act as counterbalance and ensure that we do not take positions that make no sense? I saw what British Columbia was doing and I was impressed. I must admit however that we did not visit every area of the province.

I have always said that people who work in the forest are lucky because trees grow back. I worked in the mines where the situation is quite different. Once you have worked the mine, it is depleted and must be closed. We are lucky here in Canada to have a resource such as the forest that can be continuously harvested, if you use it well.

I am worried by the equilibrium that must be maintained. Would government not have a role to play in coordinating the interests of the various stakeholders in this environment, including those of the FSC whose representatives we heard last week? Could it help to ensure that there is a middle course, that more than one group's point of view prevails?

Home Depot is a member of FSC and an ally to environmental groups. They are all on the same side. Who will counterbalance so that the correct decisions can be taken?

For example, in British Columbia, should we limit pulpwood harvesting to protect old trees, and find a new livelihood for forest workers? It is encouraging to know that the forest will continue to grow and that something can be done to make sure that our workers will be able to continue to harvest it. Fishing will also continue because the resource will continue to reproduce, but mines get depleted. These are perhaps more comments than precise questions, but I would like to hear your point of view on this issue.

[English]

Ms. Annette Verschuren: I think those are some very good points.

There does have to be a balance. The objective of announcing this policy is one of sustainability and recognizing that the world needs better-managed forests. I recognize that. I do believe that the way we structured our wood purchasing policy will give time for companies to move in that direction.

With respect to working together, I think government needs to take a leading role with industry, with all the stakeholders, in terms of coming up with an initiative that moves our industries towards a higher standard. I think that's a great suggestion, I really do. We would love to be at the table as someone who has a stake in this and recognizes it. But I believe our position is one that will encourage higher standards and not diminish the productivity of the industry at the end of the day.

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[Translation]

Mr. Yvon Godin: The reason I say such things—I mentioned mines briefly and said there is not much one can do since they cannot be grown—is that we know the fisheries disappeared because they were not well managed. We know that people have been accused of not doing their work well. I think that, if we're going to try to better manage our forests, we have to try to find the best way to do it together.

For example, one of the problems concerns the owners of private woodlands. They do not have the tools required to assist regrowth. I am very much afraid that big companies will get the upper hand and that the others will disappear, much as what happened with Home Depot. They bought everything. This is a problem for small private woodlands owners. I think this committee could maybe find solutions to try and help them. It would be dreadful if J.D. Irving had a monopoly. This brillant businessman would like nothing more than to have a monopoly.

[English]

Ms. Annette Verschuren: We certainly don't want to create an environment where we create monopolies. I'm a farmer's daughter from Cape Breton. I recognize how important woodlands are. But I also recognize that we need to manage them better, because I have walked a lot of woodlands that were not managed well. I was in Cape Breton on the weekend, and I saw a lot of lumber being pulled out on the side of the road without a tree line.

A lot of things are happening out there that are hurting our ecosystem and our environment. We need to create an environment to discourage that by providing an incentive and saying we are going to be favouring a higher standard. I really believe the market and the industry will respond at the end of the day.

[Translation]

Mr. Yvon Godin: I have one last question.

[English]

The Chair: No speeches.

Mr. Yvon Godin: No, it's all done. All the speeches are done.

The Chair: It's the former chair who lusts after the position.

Mr. Yvon Godin: Yes, but he should realize he doesn't have the chair any more, and he's making us now lose time.

The Chair: Right, so quickly....

Mr. Yvon Godin: And I probably lost my question because of that. That's bad.

The Chair: Go ahead, Monsieur Godin.

Mr. Yvon Godin: I will come back.

The Chair: Oh, you want to come back again?

Mr. Yvon Godin: Yes, after.

The Chair: Oh, okay.

Mr. Yvon Godin: Because I lost my train of thought.

The Chair: Okay. That's fair enough.

Mr. Yvon Godin: I don't know if it's fair, but we'll go—

The Chair: That's a partisan tactic, I think, employed by some members.

Mr. Provenzano.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): Thank you, Mr. Chair.

I don't want to take you over the same ground, but I understand Home Depot has in excess of 850 stores.

Ms. Annette Verschuren: It's 950.

Mr. Carmen Provenzano: It's 950 now? How many of those stores are in Canada?

Ms. Annette Verschuren: [Inaudible—Editor] We employ 13,000 people here and we're in five provinces, and we're expanding to the balance of the provinces over the next few years.

Mr. Carmen Provenzano: Where do the stores that are in Canada purchase their wood products?

Ms. Annette Verschuren: MacMillan Bloedel-Weyerhaeuser and Donohue out of Quebec are our two majors, and then we purchase from smaller regionals. We purchase from people who do pressure-treated lumber. They're a third party and bring in a lot of product from all over their market.

Mr. Carmen Provenzano: I don't know whether you're able to say, but what percentage of Home Depot's supply to its Canadian stores comes from the U.S.?

Ms. Annette Verschuren: Very little. As a matter of fact, we rely heavily in the United States on Canadian supply of wood products. Irving sells us an enormous amount of lumber, and he sells it to the northeast part of the United States.

All of the Canadian purchases are from Canadian manufacturers. It's a commodity, and it doesn't make sense to transport the stuff. So the closer you are to the market in commodities, the closer you buy.

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Mr. Carmen Provenzano: So there is no shortage of supply of FSC-certified wood products from Canadian suppliers.

Ms. Annette Verschuren: The total supply of FSC-certified products in the world would supply only 50 of our stores. That's how little FSC-certified products there are in the world.

Mr. Carmen Provenzano: Just so I understand, are you accepting wood products for sale in your Canadian stores that are not FSC certified?

Ms. Annette Verschuren: We would have nothing in our Canadian stores or our North American stores if we said we just wanted FSC-certified wood products. They are not available. We're working very closely with all our vendors to create more FSC-certified products. We're working with a couple of companies. MacMillan Bloedel-Weyerhaeuser have come out publicly to say they are moving toward FSC certification. Collins Pine, which is a company in California, is totally FSC-certified, and we're buying plywoods from that company.

Again, we're favouring and encouraging FSC-certified wood products.

Mr. Carmen Provenzano: So it's not really being set up as a block to trading with Canadian companies, in terms of your supplies.

Ms. Annette Verschuren: No. I don't know exactly how much our company relies on Canada in terms of all its wood products, but it's very significant. In the United States we buy a lot from the plantations. God bless the Americans, but they've cut all their trees.

In the northwest part there's still a lot of old growth lumber, but there are a lot of plantations. We purchase from plantations, such as Georgia Pacific, which is a big company, and Louisiana-Pacific. We have also met with all those leaders and are encouraging them to have FSC certification.

Mr. Carmen Provenzano: On a different topic—and again, I apologize if you covered it in your presentation; I had to arrive late—I understand that Home Depot was a founding member of the Forestry Stewardship Council. Can you tell the committee what motivated your company to be a founding member of that council?

Ms. Annette Verschuren: We are a founding member of the Certified Forest Products Council, which supports FSC. We just became a member in 1992—I'm not quite sure when, but we've been a member of the Certified Forest Products Council for some time.

Mr. Carmen Provenzano: Wasn't that Certified Forest Products Council founded in 1997?

Ms. Annette Verschuren: No, it was earlier.

Mr. Carmen Provenzano: There's a buyer's group that was founded in 1997, and Home Depot is a member of that.

Ms. Annette Verschuren: That's right, and that's the Certified Forest Products Council. But the FSC is the Forest Stewardship Council, and that is the certification we say we are favouring.

On your question, I have to go back to the values of the company. Bernie Marcus and Arthur Blank started this company 20 years ago. As part of its establishment, it gave back enormously to the communities it was in. It is part of our makeup. We feel that if we take from communities, we need to give back.

In Canada, for instance, I have people working full-time in community relations and health. We support programs on a continual basis in the community, where we go out and work with the community to build ramps for the physically disabled. That's a very important part of our culture and what we're about.

We have taken a number of positions in the environmental area. We were the first leaders to eliminate lead from paint products in North America in the early 1990s. We have always recognized that this is an important part and the responsibility of our business, so it's part of our values.

Mr. Carmen Provenzano: How would you respond to allegations—I'm going to get the hair up on your neck—that your involvement in the Forest Stewardship Council and in that buyers group is to create a market for your own products? How would your company respond to that?

Ms. Annette Verschuren: That is certainly not the purpose of it. The only other participant is J.D. Irving, in terms of another company. We're the first retailer in there to support it. Our objective, again, is to improve the sustainability of a very important resource.

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Mr. Carmen Provenzano: That's definitely not a motive.

Ms. Annette Verschuren: No.

Mr. Carmen Provenzano: There's no motive on Home Depot's part to create a market through its involvement.

Ms. Annette Verschuren: No. We are a market-driven organization. We will continue to deliver products to customers of the best quality at the best price we possibly can. There's no benefit for us. We're not woodland owners; we're strictly retailers. We don't own any of the companies that are participants in this program. And you didn't get the hair up on my neck.

Mr. Carmen Provenzano: Can I ask another little tiny one, or am I done?

The Chair: Very tiny.

Mr. Carmen Provenzano: In terms of the international trade issue and FSC certification, the standards of forestry management practices differ greatly in the many places where Home Depot finds its wood products. I think that's a given. How do you feel about the fact that there may be higher standards for FSC certification of a forest in Canada, as opposed to a forest in Sweden, France, or wherever in Europe?

Ms. Annette Verschuren: I think these things have to be equitable. If you get the stamp of FSC-certified, the certification standards should be equitable around the world.

Mr. Carmen Provenzano: You wouldn't tolerate inequity then?

Ms. Annette Verschuren: No.

The Chair: Okay. We have a few more minutes, so I will try to go through a second round. You will get one question apiece for about a minute or two maximum. Okay?

Let me go over to this side and Mr. Godin, for one question.

[Translation]

Mr. Yvon Godin: Fine, but I will try to fit both questions into one.

Quickly, I would like to know if environmental groups really used blackmail against Home Depot, if they threatened not to buy its products if they were not FSC-certified?

You said earlier that you agreed that people should sit at the table. You were open to this kind of initiative and to the idea that the government could take the leadership role. Can you tell me if you agree with my colleague Mr. Provenzano when he says FSC certification could perhaps be different in Canada, that trees do not grow the same way they do in France and that there could be a different standard acceptable for Canada which would allow us to attain our goals? We want to save our forest, but we have to do things differently. Would Home Depot find this also acceptable?

[English]

Ms. Annette Verschuren: Your first question was on whether the environmental groups have an impact on our decision. As I said to the chair earlier, our shareholders are really putting pressure on us, and our customers are very much putting pressure on us.

The other day I was in an aisle of our store and one of our customers said “I want a phosphate-free cleaning product. Where are they?” This is becoming a really big issue from our customers' perspective. We are certainly talking with the environmental groups, and we are continuing to work with the NGOs, in terms of the direction and the industry. There's no question they are one of the stakeholders. Did they drive us to make this initiative? No. This is something in which our company has taken a leadership role.

The second question was whether we see the government playing a leadership role in terms of modifying FSC for our country. I think the standard needs to be looked at by all parties, so we can come up with a collective agreement on what FSC means to our forests, which, as you say, are not plantations. This is an environment where timber grows much slower than, say, eucalyptus in Brazil. So I think we certainly need to work together and sit together on this.

The Chair: Was that a yes to a role for government?

Ms. Annette Verschuren: Absolutely.

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The Chair: Mr. Reed.

Mr. Julian Reed: Ms. Verschuren, I'm sure that by now you've detected a certain sensitivity about NGOs and so on. The reason, of course, is that some of them have taken to attacking Canada from a distance, from Europe, from wherever, but they have not undertaken to attack countries that are practising no forest management. They are ignoring countries in the Far East that are just pillaging and mining their forests at the present time.

That's the basis of the concern. What's the reason for attacking the good guys here? At least we're trying to improve our situation, and we have been trying for some time now. We know we can do better, but we will do better as time goes on. When we see this dialogue with these NGOs, it provokes a certain sensitivity on our part. I'm sure you can appreciate that.

The question that arises out of this is about these rogue countries that are not practising any kind of forest management and so on at the present time. Do you buy any material from them?

Ms. Annette Verschuren: Yes, we do. Obviously the position we've taken as a company is that we've identified lauan, redwood, and cedar as endangered species. We will stop buying that product. Some of it is from other countries around the world.

In terms of why the NGOs are hitting Canada, I'll let them respond, but we are also the biggest consumers per capita in the world of wood products.

Mr. Julian Reed: It's good money.

Ms. Annette Verschuren: They obviously target this market. We can impact enormous change in this area. When my paint merchant finds out that the handle on that paintbrush comes from a country that has not recognized good forest management practices, by golly, we'll change. We will change quickly. We are doing that. Whether it's the wood products on barbecues, etc., there are all kinds of wood products other than just straight lumber in our stores.

I see a transfer. It could be a transfer of products from other markets to North American markets. Again, in our everyday decision-making process, if we recognize that we need to make those decisions based upon a certain perspective, those countries will lose their markets. If the developed countries recognize that maybe this is the wrong thing to do, we can change the world.

The Chair: Thank you.

Mr. St. Denis. You're probably going to be a lot briefer than Mr. Reed.

Mr. Brent St. Denis: I'd like to build on the recent theme of the questions, particularly Mr. Provenzano's and Mr. Godin's. At a high level, I think it's easy for people to agree on the basic principles and so on, but when you get down into the details—if I can rephrase part of Mr. Provenzano's question—the issue of biodiversity is more prominent in the FSC system than in others. I think one of the attractions to consumers and companies like yours is that it covers a broader range of issues.

Take biodiversity. If you're buying wood from a natural forest, be it old growth or even newer growth, biodiversity is naturally there. It's a question of preserving what's there. If you go to other places, like Georgia Pacific's plantation lands or other maybe Scandinavian managed.... With new forests that are almost plantation-like, the biodiversity has long since been gone. In answer to a question that the FSC folks asked the other day, where there is no biodiversity or it's not a natural state, we try to force them to bring nature back.

That's the difference. We're expected to have a higher standard here because we have nature and we have to preserve it. Other places have lost it. To what extent are they being forced to bring it back? That creates a fundamental difference at the bottom line between Canada and other countries. I'm wondering if it's possible to reconcile that even through the FSC.

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Ms. Annette Verschuren: I think we need to. I don't think I can do it, but I think the collective will of the stakeholders can.

Mr. Brent St. Denis: Do you agree that at least the Europeans who are managing or using plantation forests should be forced, as we preserve, to recreate a natural environment as best they can?

Ms. Annette Verschuren: Yes.

Mr. Brent St. Denis: Okay. Thank you.

The Chair: Ms. Verschuren, you've more than held your own with the committee. Thank you very much for the forthrightness with which you answered the questions.

I note here that my trusty researcher has given me an indication that you are also subject to some attacks by the environmental groups. Even though you capitulated, you put on a brave front and said, no, we didn't. But compliments to you for that as well.

Ms. Annette Verschuren: I want to comment on the NGOs.

We want to take a moderate position. There are NGOs that are on the right and the left of the issue. We are business people. We recognize that and we're aligning ourselves with the moderates, and they certainly have a lot of influence in terms of their position. I've taken a lot of heat from members of the NGOs, but I respect that. Everyone has to bring a different perspective to the issue. We need them out on the table, and we need to come up with a plan that works for all of us.

The Chair: I'm sure all of us are interested in exactly the same thing, but we want a balanced beam, to use a word that's germane to the industry.

Madam, thank you very much for joining us today.

I'm going to ask members to hold on for a moment. We're going to suspend for one minute and then go in camera.

Thank you once again.

Ms. Annette Verschuren: Thank you very much.

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[Proceedings continue in camera]