As 29 October approaches—the date of the Forest Certification Council of Latvia's 11th International Conference “Environment and sustainable forest and land management – the latest solutions”—we speak with Jānis Švirksts, one of the conference speakers, about why this set of instructions, which some have labelled as guidelines, is being created right now.

As an expert in the forestry sector and a certification professional, do you have any idea why these Latvijas Banka guidelines* were created in the first place, and why at this particular time?

Of course, Latvijas Banka can explain that credit institutions must assess environmental risks and that it has grounds to develop a methodology for this assessment. The reasons for the creation of the guidelines are understandable enough, but the issue is the content of the document that has been produced.

You have worked in the forestry sector for a long time and, in connection with that, have participated in the development and discussion of various documents and legal acts. In your opinion, why did Latvijas Banka—which many see as an authority and a model—essentially stall, refusing to explain exactly who participated in drafting these guidelines? “We will say something,” “we won't say something,” “we could have said nothing at all...” I repeat, this is how an institution with a certain standing in society communicated.

In matters related to the environment, forestry and biodiversity, the way the final conclusions are justified is often much more important than the list of experts. Latvijas Banka has recently published the list of experts, and that is the right thing to do.

My question is different—why has the involvement of a wide range of experts resulted in such specific requirements, for example regarding soil preparation, species proportions or specific distances? Expert opinions can differ, and that is normal. Therefore, it is particularly important to clearly demonstrate why a particular solution was chosen and how its impact on forestry practice and business has been evaluated.

I recently participated in an event organised by the Latvian Biomass Association, where the development of risk assessments was discussed. Scheme holders often emphasise that it must be clear how a document was created, what sources were used, and why certain decisions were made. If involved and interested parties ask questions after reading a document and do not receive clear answers, it does not leave a good impression.

What might the future of the Latvijas Banka guidelines be? Will they change them, will they not, will they insist on their correctness and infallibility, or will they not; will they admit a mistake, or not?

Publicly available information shows that the pressure is quite significant, and, in my opinion, representatives of Latvijas Banka will have to seriously consider revising this document. It must certainly be taken into account that, ultimately, they will be the ones to decide this themselves. The Prime Minister has spoken critically about this document in public, active discussions are underway at the Ministry of Agriculture, and—I repeat—I think the bank will review the document.

For my part, I will add that they definitely need to be changed. If we talk about the quality of the guidelines, there are two types of objections against them—some are directed at unfounded assessments of forestry practice regarding what is and what is not environmentally friendly. For example, there could be two experts, both with relevant doctorates and experience, one says A, the other insists on B. That is one situation.

Another matter is a real blunder—for example, if they refer to FSC controlled wood, which is not a complete certification system, or if only one certification system is mentioned. Why? The latter, in my opinion, shows that certification terminology has not been used accurately enough in the guidelines. This is not about a difference of opinion on how a forest should be managed, but a clearly visible error.

In conversations with industry colleagues who attended the seminar in Valdemārpils, references to your report (a detailed analysis of the guidelines) usually come up. Are you the only one who has carried out such an assessment, or have others followed your example?

I am not informed. At the beginning of June, I was thinking about what information to include in my report; the guidelines had just appeared, and it was an opportunity to talk about a “hot” topic.

Many have expressed opinions on the guidelines, including specialists from “Silava”. I wanted to compare them with other standards.

What is or is not sustainable and what is or is not supportable is not exactly what Latvijas Banka should be redefining, including through communication with stakeholders. Latvijas Banka can prepare guidelines, but it should not be in the business of creating new sustainability requirements for forestry. There are certification systems that have existed and operated for 20–30 years, and which, through long-term communication with various audiences, have clearly defined what is understood by sustainability and acceptable forest management practices.

The Latvijas Banka guidelines contain many additional requirements; the majority of them—in my comparison, nearly 75%—are not included in any of the world's most popular forest management standards, FSC and PEFC. That is exactly why it is unclear why, without a publicly available assessment of the economic and sectoral impact, someone states: “You must do this!”

Another important thing—Latvijas Banka can probably refer to some EU directives or regulations, for example regarding green investments or something similar, but at least I am not aware of any EU-level document that sets exactly these requirements. It cannot be assumed that we have adopted something 1:1.

Why is the document called guidelines? In the EU, there are directives and regulations. Directives set the goal to be achieved, while regulations are directly applicable. If you name a document as guidelines, but it dictates, for example, exactly which species, exactly how many metres, etc., that is not the principle of guidelines; it is actually an instruction. By content and essence, it is an instruction.

Don't you think that Latvijas Banka has found a path that has been blamed on the drafters of various Latvian legal acts for years—instead of a law, a detailed, finely descriptive instruction has been created, which you have to follow with your finger?

Exactly! I will add one thing, though—neither a legal act nor guidelines can be overly general, so that, for example, an operator or a borrower doesn't understand what anything means.

The preparation of this type of instruction, in my opinion, shows that we are once again putting the cart before the horse—not fulfilling certain requirements, but trying to prepare additional reins that could create a less economically advantageous situation for our entrepreneurs compared to other countries, for example, our neighbours. We see this especially in the context of lending—it has been much discussed and analysed in the media. In Latvia, companies already borrow less than in Lithuania and Estonia, and this also limits the ability of companies to finance investments.

If you create a working environment for an entrepreneur that significantly reduces the areas available for commercial use or the use of species, the working environment worsens and entire sectors are affected. In the guidelines, mechanical soil preparation in forest regeneration is evaluated as an unfavourable activity, while not doing it is evaluated as favourable. Therefore, if, for example, I work in a soil preparation company or prepare machinery for such a purpose, the guidelines indirectly affect the operations of my company as well.

It is similar with spruce. One can argue whether spruce monocultures or the excessive dominance of spruce in certain conditions create risks, but it is not justified to automatically turn a formal 50% threshold into a criterion for an unfavourable impact on biodiversity. Especially if the justification primarily speaks about the climate suitability for spruce, rather than a directly measured impact on biodiversity in Latvia.

I would call this an unfounded and damaging action. It makes me ask whether, when drafting such a document, the consequences for business and management were sufficiently evaluated.

Has anyone started observing the guidelines, and has anyone already been affected?

I have no publicly available information that commercial banks have already adopted this approach in their practice. But—what is dangerous and should certainly be refuted—is saying “it's not mandatory anyway,” “these are just guidelines,” etc. People say that about many documents. Initially, it was said about habitat mapping that it would not affect anything, but its impact has been very significant. Every such document, especially if it is developed by a sufficiently authoritative institution, can subsequently be used as a reference in the development of another document, for example, in a risk assessment or in the internal procedures of commercial banks.

I am not aware that there was a sufficiently broad discussion with the industry about the specific requirements found in the guidelines before the document was published. A document has appeared that could have far-reaching consequences that we do not yet realise. I will emphasise and repeat—the drafters of other documents may find it sufficient to simply refer to this document in their work, and based on it, many things can be concluded.

* Recommendations for the identification of economic activities unfavourable and favourable to biodiversity