Enhanced Sustainable Forest Licence implementation

Principles for Enhanced Sustainable Forest Licence implementation

The purpose of this document is to guide the Enhanced Sustainable Forest Licence (Enhanced SFL) Company transition process and is the result of a collaborative effort from representatives of individual First Nations and members of the forest industry, communities and MNRF. ^{footnote 1[1]}

Nothing in the document is intended to abrogate or derogate inherent Aboriginal and treaty rights. With respect to Indigenous communities, their focus is to seek meaningful economic and management opportunities within the forestry sector, understanding that other matters, such as government-to-government relationship building, improved environmental stewardship and resource benefits/revenue sharing, will need to be addressed through separate means that are currently under consideration.

Preamble & context setting

1. The transition to Enhanced SFL Companies will occur at a moderate and measured pace.
2. The ministry will identify the proposed management areas and the associated Enhanced SFL participants, and confirm both based on pre-engagement and/or discussions with the Local Indigenous Communities, Local Forest Industry and Local Communities
3. Enhanced SFL participants will develop local solutions that address six key Enhanced SFL characteristics for the proposed management area:
   • Governance
   • Local Indigenous Community involvement, and Local Community involvement
   • Wood use
   • New entrants
   • Sustainable forest management delivery
   • Economic viability and competitive wood costs
4. The process to explore and consider options for a new market-based timber pricing system will be led by MNRF in a separate and parallel process
5. A collaborative process will be established to develop criteria to evaluate the performance of various models as a means to identify and promote future improvements

Principles and terms

6. The Crown will honour its duty to consult and accommodate Aboriginal and treaty rights under s. 35 of the Constitution Act.
7. The Enhanced SFL Companies will be formed to undertake the responsibilities associated with holding an SFL.
8. The Enhanced SFL transition process will be locally-driven, inclusive and collaborative.
9. Collaboration by Enhanced SFL participants in the transition process must take place in an environment of trust, openness, inclusiveness, mutual respect, and personal responsibility where decisions are made collaboratively and accountability is shared.
10. The Ministry will provide oversight and available resources, facilitate transition and monitor progress.
11. The Enhanced SFL transition process will advance opportunities to create efficiencies for all parties and will promote competitive wood costs.
12. The composition, structure and governance of Enhanced SFL Companies will be flexible to address local circumstances and interests of local Enhanced SFL participants (including the Local Indigenous Communities, Local Forest Industry, Local Communities and MNRF).
13. The Enhanced SFL Company's Business Agreement (e.g. shareholders or membership agreement) will respect existing wood supply and harvest commitments.
14. The Enhanced SFL transition process will respect the harvest and wood supply commitments of current shareholder SFL Companies, and current shareholders will have the option, at their sole discretion, to remain shareholders in the Enhanced SFL Company.
15. Existing wood supply and harvest commitment holders will have the option, at their sole discretion, to become shareholders and nominate representation to the Board of Directors of the Enhanced SFL Company.
16. The Business Agreement will provide opportunities for membership changes including attrition and recruitment of new shareholders and provisions for new entrants.
17. Local Indigenous Communities and Local Communities will be provided the opportunity to participate in the Enhanced SFL Company with a minimum of 1 voting Board of Director positions reserved for Local Indigenous Communities and 1 for Local Communities as Outside Directors.
18. Board Directors representing shareholders with financial obligations will have proportional influence over financial decisions of the Enhanced SFL Company while ensuring all directors, including Outside Directors, have a vote in all decisions. No individual member will have the ability to directly or indirectly control the Enhanced SFL Company.
19. An Independent General Manager shall be hired/retained/report to the Board of Directors with primary responsibility for sustainable forest management, as directed by the Business Agreement.
20. All Board Directors have a fiduciary duty to make decisions in the best interest of the Enhanced SFL Company. The Board of Directors shall provide high level leadership, strategic planning, compliance and stewardship oversight, set objectives and evaluate performance of the Independent General Manager
21. The Board of Directors will be bound and directed by the Business Agreement which will foster good governance practices.
22. The Enhanced SFL Company will promote the sustainable use of the full available Crown wood supply by ensuring it is used or made available to others for use.

Definitions

Business agreement

means the fundamental and constitutional/constating documents of the Enhanced SFL company, including the articles of incorporation, shareholders agreement and by­ laws, and that provide for such matters as financing, decision-making, voting, issuance/transfer of shares, board of directors, allocation of rights to wood supply.

Enhanced SFL Company

means a private company to which an SFL has been or may be issued and that was formed to possess the Enhanced SFL characteristics as set out in this document. The company may be a shareholder company, or other incorporated company such as a limited partnership; the expectation is that the majority will be Enhanced SFL companies with share capital.

Local Indigenous Communities

mean Indigenous communities that are located within or adjacent to a proposed or final management area.

Local Community

means local organized municipalities and/or unorganized territory that are located within the proposed or final management area.

Local Forest Industry

means the consuming mills and harvesters that hold, at the time of determination, one or more of the following from the proposed or final management area:

• Crown wood supply commitments
• Crown harvest commitments
• Crown supported business arrangements.

Outside Directors

means a director of an Enhanced SFL Company that is not, currently or recently:

• a shareholder of the Enhanced SFL Company
• an employee or executive of the Enhanced SFL Company
• a shareholder of a company that is a shareholder of an Enhanced SFL Company
• local Forest Industry or its shareholders, employees or executives
• an employee of the Ministry of Natural Resources

This includes their related parties and affiliates, and where non-corporate entities are involved, applies to similar positions.