EIA.AnnualReport

2007 ANNUAL REPORT ENVIRONMENTAL INVESTIGATION AGENCY WASHINGTON, DC

PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

EIA-GLOBAL.ORG

OUR MISSION Working in Washington, DC, since 1990 and in London since 1984, the Environmental Investigation Agency (EIA) uses pioneering undercover investigations to expose environmental crimes, and campaigns for solutions to illegal wildlife trade and other threats to our global environment. Our campaigns to protect endangered wildlife, forests and the global climate operate at the intersection between global trade and the accelerating loss of natural resources and species.

EIA is a different kind of environmental organization: UÊ Our methods are unique; our success rate far outweighs our size.

UÊ We protect threatened species and the global climate with intelligence from our investigations — for the benefit of both wildlife and people.

As a non-profit organization with IRS 501(c) (3) designation, EIA relies on financial support from individual donors and charitable foundations. Donations to EIA are U.S. tax deductible to the full extent of applicable law.

IN THIS REPORT 1

A MESSAGE FROM THE PRESIDENT AND THE EXECUTIVE DIRECTOR

2

HOW WE WORK, WHERE WE WORK

5

FORESTS FOR THE WORLD

9

SPECIES IN PERIL

This report focuses on the activities of EIA’s Washington, D.C. office with reference to the combined global impact achieved with EIA’s London office. © Environmental Investigation Agency 2007.

No part of this publication may be reproduced in any form or by any means without permission in writing from the Environmental Investigation Agency, Inc.

COVER PHOTOS: TOP ROW, LEFT TO RIGHT: Footage of wildlife parts trade in China. © EIA

11 GLOBAL CLIMATE

A logger cutting in Tanjung Puting National Park. Here and in other lowland forest areas throughout Indonesia, the ripple effects of highimpact logging techniques have multiplied the ecological damage caused by the plunder of ramin wood. © A. Ruwindrijarto/EIA/Telapak

13 FINANCIALS

Undercover footage of timber smugglers in China. © EIA

16 SUPPORTING SERVICES: GROWTH AND DEVELOPMENT

BOTTOM ROW, LEFT TO RIGHT: Humpback whale breaching. Stan Butler © NOAA Factory emitting greenhouse gas pollution. Ezra Clark © EIA

17 PEOPLE AND DONORS

Elephant. Mary Rice © EIA

PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

A MESSAGE FROM THE PRESIDENT AND THE EXECUTIVE DIRECTOR EIA IS A LEAN ORGANIZATION MAKING A GLOBAL IMPACT Our campaigns address today’s most pressing environmental problems — species and natural forest loss, climate change and ozone layer depletion. And they do so from a unique and increasingly important perspective: the threat posed to our natural environment by ever-accelerating demands for natural resources from the global economy.

Consumer demand, the activities of multinational corporations and illegal trade in environmental products are colliding to exacerbate global environmental problems that threaten the diversity of life on Earth.

Our investigations around the world equip us with unique insight into precisely how international trade — especially illegal trade — impacts the world’s declining natural resource base, threatening the future of both people and wildlife. For a quarter century, on six continents, we have exposed, campaigned against and proposed solutions for illegal and unsustainable trade in natural resources and industrial global warming gases that also deplete the ozone layer.

THE PRESIDENT Allan Thornton has spent 30 years at the leading edge of international environmental campaigning. He was a founding member of Greenpeace and the first executive director of Greenpeace UK. In 1984 he co-founded EIA in London, UK, and in 1990 he established EIA, Inc. in Washington, D.C. In 2004 Queen Elizabeth II conferred upon him the status of Officer of the Order of the British Empire (OBE) for his services to the environment.

And we know what solutions work. From the 1989 global elephant ivory trade ban to the 1992 U.S. Wild Bird Conservation Act and the almost complete 2006–7 withdrawal of Japan’s three largest whale meat producers from the trade, EIA has led practical, effective and landmark conservation efforts.

HIGHLIGHTS OF OUR 2007 SUCCESSES INCLUDE: UÊSecuring improvements in the timber procurement policies of major U.S. retail chains such as Wal-Mart, The Home Depot and Lowe’s; UÊInstigating a groundbreaking global agreement to accelerate the phaseout of a powerful type of industrial global warming gas, worth over 20 billion CO2 equivalent tons; and UÊLeading a highly unusual, broad coalition of environmental and labor groups and industry associations to bring about formal consideration by the U.S. government of a national ban on the tide of illegally sourced timber imports entering these shores. This garnered news coverage of EIA on the front page of the Sunday, April 15, 2007 early edition of the Chicago Tribune, among many other news articles. © EIA

PRECEDENT-SETTING DEVELOPMENT OF GLOBAL SIGNIFICANCE Our front-line investigations and awareness-raising efforts in 2007 left the U.S. Congress poised to pass a U.S. national ban in early 2008, making it a punishable offence to import illegally harvested timber into the United States — the first such law anywhere in the world! This breakthrough is the result of a seven-year campaign by EIA, and opens an exciting new frontier in our efforts to work with governments, companies and civil society to clamp down on illegal logging and associated timber trade worldwide.

EIA RELIES ON YOUR SUPPORT TO CONTINUE OUR UNPRECEDENTED MOMENTUM In 2008, we will focus our efforts on securing this pending U.S. ban, monitoring and supporting its implementation on the ground, promoting similar demand-side measures in other major timber importing countries, and setting in motion a plan to apply this tool to change the face of an annual trillion dollar global industry of trade in wood products. We will help shape the critical debate on how to protect forests as carbon sinks in the battle against climate change.And we will continue to expose and campaign against illegal and unsustainable trade targeting some of the world’s most endangered and beloved species.

THE EXECUTIVE DIRECTOR Following ecological and climate research at Harvard University and the New England Aquarium, Alexander von Bismarck joined EIA in 1996, where he has exposed and campaigned against environmental crimes across the world. His work on illegal trade in endangered species, timber and banned ozone-layer-depleting substances has involved him in top-level advocacy in the United States and at intergovernmental forums. He has a Harvard bachelor’s degree in environmental science and public policy and a master’s degree in environment and development from the London School of Economics.

This report documents what has been a very successful and productive year for EIA. We hope you enjoy reading it and express our heartfelt thanks to our supporters who make our achievements possible.

Allan Thornton

Alexander von Bismarck

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2007 ANNUAL REPORT

ENVIRONMENTAL INVESTIGATION AGENCY

WASHINGTON, DC

HOW WE WORK, WHERE WE WORK: PROTECTING THE ENVIRONMENT WITH INTELLIGENCE ... IN A COMPLEX GLOBAL ECONOMY 1. IDENTIFY:

where international markets undermine efforts around the world to protect the environment, using over 20 years of unique data, investigations, and global contacts.

EUROPE

Receiving Illegal Wood Greenhouse Gases Endangered Species

UNITED STATES

Q? D L ; I J ? = 7 J ? E DS

Receiving Illegal Wood Greenhouse Gases Endangered Species

Q? D L ; I J ? = 7 J ? E DS

Exports from China to U.S. AFRICA

Elephant Poaching and Ivory smuggling

Q? D L ; I J ? = 7 J ? E DS CENTRAL & LATIN AMERICA

2. DOCUMENT:

Illegal Logging Greenhouse Gases

use on-the-ground, undercover operations to document the problem and track its demandand supply-side causes.

Q? D L ; I J ? = 7 J ? E DS

HISTORY OF LASTING SOLUTIONS 2001 1989

International ban on elephant ivory trade

1992

China domestic ban on rhino horn trade

U.S. Wild Bird Conservation Act, limiting imports of exotic birds into the U.S.

2

2004

Groundbreaking regional agreement in Southeast Asia to improve forest law enforcement

1993

1997

Global licensing system to control ozone depleting chemicals

European Union ban on the import of grizzly bear hunting trophies from British Columbia, Canada

2003

Closure of 53 illegal mines that were destroying prime tiger habitat in India

PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

RUSSIAN FAR EAST JAPAN Illegal Logging

Q? D L ; I J ? = 7 J ? E DS

Whaling

3. SHAPE SOLUTIONS:

work with partners to develop innovative, achievable and lasting measures to solve the problem on whatever scale necessary.

Q? D L ; I J ? = 7 J ? E DS CHINA

Exports from China to U.S.

Trading Illegal Wood Greenhouse Gases Wildlife

Q? D L ; I J ? = 7 J ? E DS

SOUTH EAST ASIA

Illegal Logging Greenhouse Gases

Q? D L ; I J ? = 7 J ? E DS

4. IMPLEMENT

& FOLLOW UP:

strategic, alliance-based campaigning, leveraging EIA’s unique evidence to institute lasting solutions.

KEY

Tracking the Trade EIA Offices

2006–07

2007

Permanent cessation of whale meat trade by Japan’s three largest commercial manufacturers (at least 30 million cans annually)

U.S.-Peru trade agreement renegotiated with groundbreaking Annex to fight illegal logging and reform forest governance

2007 2005

Biggest government operation against illegal logging in world history takes place in Papua, Indonesia

Historic international agreement signed in Montreal, Canada to phase out 22 billion carbon dioxide equivalent tons of greenhouse gases in the next 20 years

2007

World’s first ban on the import of illegally logged timber and wood products introduced by the United States Congress

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2007 ANNUAL REPORT

ENVIRONMENTAL INVESTIGATION AGENCY

WASHINGTON, DC

METHODS: EIA’S EDGE EIA works at the leading edge of the world’s most pressing environmental problems: forest loss, species extinction and global climate change.

For almost a quarter century, we have pioneered the use of undercover investigations to expose environmental crime around the world. In parallel, we have developed a global intelligence and advocacy network at the highest levels of government, civil society and industry. We use this capacity, together with our campaigning and policy analysis expertise, to spur changes in market demand, government policy and enforcement related to illegal trade in environmental products and other threats to the natural world.

In collaboration with our London affiliate, EIA has directly brought about such changes in countries and trade blocs ranging from Indonesia and China to the United States and the European Union. Those changes have saved the lives of millions of rare and endangered animals while curbing illegal trade in timber, wildlife and industrial global warming gases that also deplete Earth’s fragile protective ozone layer.

Our approach encompasses producers, consumers and everyone in between. Our undercover investigations shape our strategies and provide visual and factual evidence for policymakers and enforcement agencies. Our campaign teams leverage the information we gather on highly organized, large-scale eco-criminal operations with policymakers, the media and the public to bring about systemic change.

From the poacher’s killing fields and timber barons’ fiefdoms to corporate boardrooms and the corridors of power, we seek to stamp out illegal trade and promote trade rules and frameworks that protect wildlife and natural resources.

Elephant. Mary Rice © EIA

EIA’S METHOD: TRACKING THE TRADE, PROMOTING SOLUTIONS & CAMPAIGNS Global trade and its impact on climate, species and natural resources provide the over-arching framework for EIA’s three interlinked core campaigns: Forests for the World focuses on exposing large-scale illegal deforestation and associated international trade; amplifying the voices of impacted local peoples; and shifting demand toward sustainable timber and wood products.

Species in Peril focuses on the illegal and unsustainable killing of, and trade in, threatened wildlife including elephants, tigers, whales, dolphins and porpoises.

Global Climate focuses on phasing out and ending illegal trade in industrial gases that act as powerful global warmers and destroyers of the Earth’s protective ozone layer.

Each campaign’s activities complement the others. We work to protect endangered species, many of which require forest habitat that is being decimated by illegal logging and timber trade. Deforestation is also exacerbating global climate change by releasing carbon stored by trees into the atmosphere.

The color-coded map on pages 2–3 shows how our campaigns operate: across the world; at every layer of governance — from community to international; and at every link in the illegal trading chain.

The following pages give a detailed account of campaign activities during 2007.

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PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

FORESTS FOR THE WORLD THE ILLEGAL TIMBER TRADE CRISIS

EIA’S FOREST PROGRAM

The goal of EIA’s forest campaign is to protect the world’s remaining natural forests, and the people, wildlife and global climate that depend on them. We believe this can only be achieved by breaking the chain of demand and supply that is fueling the multi-billion-dollar global trade in illegally cut timber — with no questions asked regarding the wood’s origin.

Our dual approach is to expose forest crime and to promote strong new demand-side government measures and corporate oversight to end international trade in illegally sourced wood products.

From Indonesia to Russia and from Tanzania to the Peruvian Amazon, illegal logging is acknowledged as a major environmental, social and economic problem. Black market timber accounts for as much as 70% of all wood cut in these countries.

The consequences for both people and the planet are profound: UÊThe World Bank estimates that illegal logging and associated timber trade costs developing nations close to $15 billion a year in lost assets and revenues.

UÊShrinking forest habitats are endangering many forest-dwelling species, including the orangutan (Asia’s only great ape), rhinos, tigers and elephants.

UÊDeforestation releases carbon and already accounts for almost 20 percent of annual global greenhouse gas emissions.

UÊIllegal logging provokes human rights violations and social conflicts in many poor countries.

Our methods are comprehensive. We work in both major timber-producing regions such as Southeast Asia, Russia and Latin America, as well as in major wood-consuming markets — the United States and European Union. We work at every level of governance — with forest communities and local non-governmental organizations (NGOs) in countries such as Indonesia and Honduras, with national agencies in both producer and consumer countries, and with international forums such as the G8 and the UN Convention on International Trade in Endangered Species (CITES).

During the past decade, our undercover investigations have instigated major crackdowns on illegal logging and timber trade in Indonesia, Malaysia, Taiwan and Honduras. Our frontline evidence combined with trade data analysis has illustrated how U.S., European and Japanese consumer demand drive the illegal logging epidemic. Our investigations into the role played by major corporations in fuelling illegal timber trade have led to procurement policy shake-ups by such household names as The Home Depot, Lowe’s and Wal-Mart.

2007 Historic Success In 2007, our forest campaign scored historic successes, described on the next three pages.

Most notably, our leading field investigations and public education efforts culminated in the introduction of landmark legislation in the U.S. Congress to close U.S. markets to illegally cut timber and wood products from anywhere in the world.

CONGRESS APPLAUDS EIA LEADERSHIP

“The principal negotiators of the compromise — the American Forest & Paper Association, the Hardwood Federation, and the Environmental Investigation Agency — deserve a tremendous amount of credit for sticking with this and finding a solution that everyone could support.

I applaud them for their hard work, the maturity with which they approached the issue, and the respect that they showed each other throughout the process. Their conduct is a model for how things should work in Washington.”

SEN. RON WYDEN (D-OR) introducing the Combat Illegal Logging Act 2007 on the Senate floor.

Logging in Primorsky Krai, Russia © EIA

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2007 ANNUAL REPORT

ENVIRONMENTAL INVESTIGATION AGENCY

WASHINGTON, DC

IN THE U.S.: 2007, A BREAKTHROUGH YEAR The United States is the world’s biggest importer of wood products. U.S. demand for products ranging from flooring to furniture and from baseball bats to baby cribs is helping to drive the global trade in illegally sourced timber. Estimates suggest that U.S. consumption of suspect wood products (not including pulp and paper) may be as high as 10 percent of all U.S. annual wood imports — worth $3.8 billion in 2006.

Since 2001 EIA has educated U.S. policymakers on the need to close the legal vacuum enabling this flood of illegal timber into the U.S. market. With no federal or state laws in place to punish companies that import or sell products stemming from illegal logging, U.S. timber traders, importers and retailers have had no incentives to clean up their supply. Our advocacy work aims to achieve strong, effective demand-side action in the UnitedStates to stop this ecologically and socially destructive practice.

In 2007 EIA’s campaign left U.S. Congress poised to pass the world’s first ban on trade in illegal wood: NEW POLICIES:

COALITION BUILDING:

MEDIA MOMENTUM:

UÊMarch 2007: Illinois state representative Susana Mendoza introduced a bill, drafted with EIA’s technical assistance, to outlaw trade in illegal wood in Illinois.

UÊJuly 2007: Our long-term efforts to build an influential industry-NGO-labor coalition in favor of a U.S. ban on imports and trade of illegally logged timber and wood products came to fruition. In July, 23 organizations including the Sierra Club, the Natural Resources Defense Council (NRDC), the American Forest & Paper Association, and the Hardwood Federation signed a public letter to Sen. Wyden in support of such a ban.

Widespread media coverage focusing public attention on the issue of illegal timber imports into the United States reached new heights.

Outlets covering EIA’s work included the Chicago Tribune (front page Sunday edition), The Associated Press, Reuters, International Herald Tribune, and National Public Radio’s “Morning Edition.”

UÊMarch 2007: EIA’s frontline education of U.S. policymakers on the leading role that U.S. market demand plays in driving illegal logging results in the introduction of the Legal Timber Protection Act in the House of Representatives by Rep. Earl Blumenauer (D-OR), Rep. Robert Wexler (D-FL) and Rep. Jerry Weller (R-IL).

UÊAugust 2007: EIA persuades Senator Ron Wyden (D-OR) to champion an amendment to the Lacey Act, a wildlife trafficking statute. He and Sen. Lamar Alexander (R-TN) introduce the Combat Illegal Logging Act 2007 in the U.S. Senate.

UÊOctober 2007: EIA persuades the House Committee on Natural Resources’ Subcommittee on Fisheries, Wildlife, and Oceans to hold a legislative hearing on the Legal Timber Protection Act; our executive director gives testimony.

UÊOctober 2007: EIA releases a hard-hitting report, No Questions Asked, which describes the U.S. market’s prominent role in driving illegal logging around the world.

UÊNovember 2007: The House Committee on Natural Resources unanimously passes the Legal Timber Protection Act for consideration by the House of Representatives.

UÊDecember 2007: As a result of EIA advocacy, the Senate Committee on Agriculture incorporates the Combat Illegal Logging Act into the federal Farm Bill, which is passed by the Senate.

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UÊOctober 2007: EIA, the Sierra Club, NRDC and the Goldman Environmental Prize organized a U.S. speaking and media tour of environmental leaders working against illegal logging from Indonesia, Peru, and Papua New Guinea. The tour, “Faces of Forest Loss,” conducted public forums, press interviews and events in San Francisco, Portland and New York. The tour ended in Washington, D.C., with appeals to staff from the House and Senate leadership offices for federal legislation to prohibit U.S. imports of illegally logged wood.

In March 2007, Representative Earl Blumenauer (D-OR) led the introduction of bipartisan legislation into the U.S. House of Representatives amending the Lacey Act. In July 2007, Senator Ron Wyden (D-OR) introduced a similar bill to the U.S. Senate with support from a broad coalition of industry, labor, and environmental groups. © Alexandra Silverthorne/EIA

PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

IN THE U.S.: INSTIGATING RESPONSIBLE ACTION BY BIG BUSINESS In the absence of laws prohibiting imports of illegally sourced wood, U.S. wood importers and retailers have failed to ask questions about the origins of their supply from the rainforests of Asia, Latin America, and Africa, as well as from Russia’s boreal forests.

Consumer demand for cheap wood products also has encouraged U.S. retailers to acquire wood products from the cheapest obtainable sources.

In practice, this can mean buying from overseas companies that do not adhere to proper labor standards, avoid paying taxes and tariffs, and even steal wood from protected areas.

EIA works to improve corporate accountability by first exposing U.S. companies’ links with illegal logging or destructive timber trade activity and then helping them to improve wood buying practices. In 2007, we successfully exposed and won concessions from several household names:

WAL-MART

THE HOME DEPOT AND LOWE’S

ARMSTRONG WORLD INDUSTRIES

In December, following months of undercover investigations along the Russia/China border, EIA released an eye-opening report linking illegal logging activity and the world’s biggest retailer. Entitled Attention Wal-Mart Shoppers: How Wal-Mart’s Sourcing Practices Encourage Illegal Logging and Threaten Endangered Species, the report documented how Wal-Mart wood products — including baby cribs, toilet seats and craft sticks — originated from forests in the Russian Far East that are rife with illegal logging and home to the critically endangered Siberian tiger.

In 2007 EIA scored a major victory in persuading the United States’ leading home improvement chains, The Home Depot and Lowe’s, to eliminate merbau from their supply chains. Merbau is a threatened tropical wood commonly used in flooring. The retailers acted on the basis of an internationally publicized 2006 EIA exposé of rampant illegal felling of merbau in Indonesia’s remote Papua Province, where dozens of new species have been discovered in recent years.

In 2007 EIA also held a series of meetings with executives of the world’s largest wood flooring manufacturer/distributor, Armstrong World Industries. These resulted in the company initiating a new exotic wood purchasing policy and a program to identify and eliminate use of high-risk timber in its products. EIA was able to leverage these commitments as a result of our 2006 merbau exposé, Behind the Veneer, which identified Armstrong as a major importer of high-risk wood for flooring.

Our findings — widely reported in the U.S. media — revealed contradictions between the practice and the policy of Wal-Mart’s highprofile “Sustainability 360” initiative, which commits the company to “first and foremost” avoiding illegally harvested wood.

EIA also contributed a chapter on Wal-Mart’s high-risk wood sourcing practices to a collaborative report entitled, Wal-Mart’s Sustainability Initiative: a Civil Society Critique. This was published in September by the Big Box Collaborative, a coalition of 23 human rights, labor and environmental organizations.

At the close of 2007 EIA is poised to begin a constructive dialogue with Wal-Mart to address the problems uncovered in Siberia and improve the company’s wood sourcing policies, with enormous potential for improving wood trade practices in China and around the world.

In 2005, EIA published The Illegal Logging Crisis in Honduras, which revealed a chain of illegal and high-risk timber supply from Honduran tropical forests to the shelves of The Home Depot stores. Our widely publicized report revealed strong financial links between The Home Depot and the single most powerful Honduran timber barron, José Lamas. During 2007, The Home Depot responded by pressuring its suppliers of Honduran wood products to institute stringent checks to ensure legal origin. The Honduran government launched a major investigation into Lamas’s business practices, and his U.S.-based company, identified by EIA as doing $200 million of business with The Home Depot every year, was sold to new U.S. owners.

Toilet seats manufactured in China using high-risk wood—destined for the U.S. market. © EIA

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2007 ANNUAL REPORT

ENVIRONMENTAL INVESTIGATION AGENCY

WASHINGTON, DC

AROUND THE WORLD PERU: FREE TRADE AND FORESTS In 2006, EIA released a widely publicized report, America’s Free Trade for Illegal Timber.

This highlighted how the U.S.-Singapore Free Trade Agreement had triggered a rise in U.S. imports of illegally sourced Asian timber. During 2007, as a direct result of our advocacy and public education: UÊ Illegal logging became a prominent issue

for the House Committee on Ways and Means of the U.S. Congress. In January, 11 committee members wrote to the U.S. Trade Representative demanding that future free trade agreements be strengthened to stop imports of illegally sourced timber.

UÊThe U.S.-Peru Free Trade Agreement signed in May became a groundbreaking model for addressing illegal timber traffic through trade agreements. EIA, working with NGO coalition partners, provided expert input to congressional staffers. As a result, concrete provisions were inserted into the agreement, mandating Peruvian forestry inspections and reform of the country’s forest laws, institutions and procedures.

GERMANY: G8 NATIONS COMMIT ON ILLEGAL LOGGING

HONDURAS: HUMAN RIGHTS UPHELD, FOREST LAW PASSED

BALI: TIMBER MARKETS AND CLIMATE CHANGE

When two grassroots community activists fighting illegal logging on their lands were killed, EIA led a coalition of international environmental and human rights organizations pressing the Honduran president to bring their murderers to justice. After our efforts sparked worldwide media attention, an investigation was held and four policemen arrested for the crime.

In December 2007, EIA attended the UN Framework Convention on Climate Change meeting in Bali, Indonesia, to input into the growing dialogue about protecting forests as carbon sinks. We plan to apply our expertise in international trade, timber markets and forest governance to help shape developing global efforts to reduce greenhouse gas emissions from tropical forest loss.

Partly as a result of EIA’s highly publicized 2005 investigative report, The Illegal Logging Crisis in Honduras, and follow-up advocacy, the country’s Congress passed a new national Forest Law in late 2007. EIA’s local community partner organization, The Environmental Movement of Olancho, played an unprecedented role in developing the legislation whose key provisions included: replacing the existing, corruption-riddled national forestry institution with a new higher-level government agency; increasing jail penalties for forest and wildlife crimes; and creating “Consultative Councils” — at community, municipality, department and national levels — to increase citizen participation and control in the forestry sector.

At the annual G8 meeting in Germany, EIA successfully advocated for the eight wealthy nations, all major timber consumers, to consider bans on the import and trade of timber and wood products stemming from illegal logging. Senator Wyden and Congressman Blumenauer outlined their congressional initiatives to stop U.S. imports of black market timber to a gathering of G8 consumers and key producer nations, drawing on EIA briefings. Specific policy initiatives will be on the table at the 2008 G8 meeting in Tokyo, where EIA will press other nations to follow the United States’ lead.

Orangutan © EIA

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PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

SPECIES IN PERIL SPECIES LOSS AND GLOBAL ILLEGAL WILDLIFE TRADE

ELEPHANT CAMPAIGN

TIGER CAMPAIGN

EIA’s groundbreaking investigations into the elephant poaching killing fields of the 1980s helped to pave the way for the 1989 ban on international ivory trade. This stopped the African elephant’s slide toward extinction and is counted as one of the environmental movement’s greatest successes.

EIA’s tiger campaign, led by our London office, exposes and campaigns for greater action against the international illegal trade in tiger skins, bones and derivatives.

EIA’s species work was born out of efforts to protect endangered species from another major threat: illegal trade in animal parts. Today, as global trade accelerates, this threat is more pressing, and our work more vital, than ever.

The illegal wildlife trade is estimated to be worth around $10 billion a year.

For two decades, EIA has worked tirelessly to maintain the ban in the face of efforts by Southern African elephant range states to overturn it. We also investigate, document and publicize continued elephant poaching and track illegal ivory trade routes worldwide.

EIA uses its distinctive combination of undercover investigative techniques, policy analysis, and advocacy to document, expose, propose and promote solutions to illegal wildlife trading activity. Our species campaign focuses on elephants, tigers, whales, dolphins and porpoises, while our forest campaign helps protect forest-dwelling species such as the endangered orangutan (Asia’s only great ape) and myriad other wildlife species from deforestation.

2007 Highlights:

» During 2007, our U.S. investigative and advocacy staff went undercover in the Russian Far East, documenting illegal logging and timber smuggling. In December we published our findings that Wal-Mart, the world’s largest retailer, stocked many products sourced from habitat of the critically endangered Siberian tiger (see also page 6).

The world’s rich tapestry of species is unraveling at an unprecedented pace. Scientists estimate that up to 50,000 animals, insects and plants become extinct every year. Human activity — including habitat destruction, pollution and climate change — are to blame.

Ivory room at the Dalian New Friendship Store, Dalian, China May 2007 (on sale for us$ 130,000) — 17 years after the ivory ban. Where does all the ivory come from? © EIA

» In recent years, wildlife agencies and conservation groups have reported an alarming upsurge in elephant poaching across Africa. In June 2007, EIA published an influential report and video documenting how demand for ivory trinkets from a growing Chinese middle class, coupled with lax Chinese oversight of illegal imports, is triggering this slaughter. Entitled Made in China: How China’s Illegal Ivory Trade is Causing a 21st Century African Elephant Disaster, our report detailed poaching in 13 African countries and charted the trade routes for smuggling the ivory into China. It was distributed at the June meeting in The Netherlands of the UN Convention on International Trade in Endangered Species (CITES), which regulates ivory trade. The report’s revelations, combined with EIA advocacy, successfully thwarted China’s efforts in 2007 to win authorization

by CITES member governments to become a designated ivory trading nation and take part in auctions of tusk stockpiles. » EIA fielded teams that carried out several major investigations into illegal ivory trade in Tanzania. » EIA investigators presented evidence on international ivory smuggling at the Tanzaniahosted Interpol Working Group on Wildlife Crime.

2007 Highlights:

» During 2007, EIA also engaged in tiger protection advocacy efforts with the U.S. Fish and Wildlife Service and other agencies.

© EIA

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2007 ANNUAL REPORT

ENVIRONMENTAL INVESTIGATION AGENCY

WASHINGTON, DC

WHALE, DOLPHIN AND PORPOISE (CETACEANS) CAMPAIGN Despite a global commercial whaling ban, whale species remain threatened by whaling and whale meat trade, as well as by pollution, over-fishing and ozone layer depletion. Japan is the main trading culprit — hunting more than 1,000 great whales a year, with the meat made available for commercial sale in Japan.

Tail of a humpback whale. © NOAA

Canned minke whale meat for commercial sale in Japan.

Product from Japan’s whale hunts. © EIA

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For more than two decades, EIA has campaigned internationally — working with sympathetic governments and at the International Whaling Commission (IWC) — for new measures to end Japan’s commercial whaling and protect threatened whale habitat.

Japan’s fleets also kill more than 10,000 dolphins, porpoises and small whales every year, selling the meat to domestic supermarkets and restaurants. These species are not protected from hunting by the international oversight of the IWC. EIA’s efforts to bring this cruel and ecologically unsustainable trade to an end focuses on persuading brand name U.S. frozen foods companies to pressure their Japanese parent corporations to stop stocking whale meat. By mid 2007, as a direct result of our work, three of Japan’s four top supermarket chains had ceased all trade in whale meat. Additionally, Japan’s three largest former whaling companies had committed to cease all involvement in the whaling industry. Thus, whale product sales had been suspended in 2,500 Japanese supermarkets and other retail outlets, and 30 million cans of whale, dolphin and porpoise meat a year were removed from the marketplace. A growing whale meat mountain is now proving an embarrassment to the government of Japan, as corporate Japan walks away from whaling.

2007 Campaign Highlights » In April 2007, EIA launched a joint campaign with Humane Society International and the International Fund for Animal Welfare to end whale meat sales by Kyokuyo, Japan’s largest remaining whale meat producer.

Our report, Raw Deal: Kyokuyo, True World Foods and Japan’s Whale Hunts, revealing retail links between Kyokuyo and True World Foods, a major U.S. sushi meat supplier, received significant U.S. media coverage. We simultaneously launched a Raw Deal web site through which concerned citizens could submit protest letters to True World Foods. Within eight days of the campaign launch, Kyokuyo publicly pledged to cease its whale meat business once its existing inventory was sold. » In May 2007, the world’s largest seafood company, Japanese-owned Maruha, confirmed that it was ending whale meat production and trade due to “complaints from environmental groups.” » In August 2007, EIA negotiated with Japan’s second-largest general retailer, Aeon Corporation, to cease all whale meat sales in 17 of its newly acquired chain of 20 Posful stores. Since 2003, a Memorandum of Understanding between Aeon and EIA has ended whale meat sales in close t o 1,000 Japanese stores. » In May 2007, EIA launched a hard-hitting TV anti-whaling advertising campaign — “Tell Japan We’ll Keep the Ban” — in six Eastern Caribbean countries. Our goal is to persuade their governments to switch their IWC vote from supporting renewed whaling to upholding the global commercial whaling ban. The campaign is supported by a website which includes thorough information for citizens to contact their legislators and learn more about the issue. Later in the year, the campaign was expanded to include radio and newspaper outlets. » In May/June 2007 our cetacean campaigners pressed governments for tougher whale conservation measures at the International Whaling Commission’s annual meeting in Anchorage, Alaska. Despite mounting pressure from a pro-whaling bloc, Japan’s efforts to win IWC approval for an annual minke whale hunt were unsuccessful.

PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

GLOBAL CLIMATE CLIMATE CHANGE, OZONE LOSS AND CHEMICAL TRADE EIA’s unique global climate campaign strategy can be summed up in the phrase “One Atmosphere.” Our program straddles two inextricably linked threats to the Earth’s protective blanket: global warming and depletion of the ozone layer.

For 11 years we have led efforts to phase out industrial gases that, when released, both deplete the ozone layer and act as powerful global warming agents. In the 1990s, after the Montreal Protocol treaty was established to protect the ozone layer and banned chlorofluorocarbons (CFCs), a lucrative black market trade in these refrigerant gases sprang up. EIA’s subsequent undercover investigations and exposés, from Asia to the U.S. and Europe, have helped to close down much of this illicit trade.

Our investigations into the chemical trade have also exposed an untapped opportunity in the battle against climate change: the elimination of HCFCs (hydrochlorofluorocarbons) and HFCs (hydrofluorocarbons). These widely used commercial refrigerant gases can be 12,000 times more powerful in warming the atmosphere than equivalent amounts of carbon dioxide (CO2), the main greenhouse gas. In 2006, we published a ground-breaking report, Turning Up the Heat — Linkages Between Ozone Layer Depletion and Climate Change: The Urgent Case of HCFCs and HFCs, which put this issue on the agenda of governments worldwide.

2007: A BREAKTHROUGH YEAR

AWARDS

EIA was the prime mover behind a landmark agreement by member countries of the Montreal Protocol to accelerate the international phaseout of HCFCs. If implemented, the release of some 20 billion tons of greenhouse gases will be prevented over three decades, the equivalent of about three years’ worth of total U.S. CO2 emissions.

In 2007, EIA received two major awards for our 10 years of undercover and campaign work to protect the ozone layer:

If implemented, the release of some 20 billion tons of greenhouse gases will be prevented over three decades, the equivalent of about three years' worth of total U.S. CO2 emissions.

UÊThe U.S. Environmental Protection Agency’s Best-of-the-Best Stratospheric Ozone Protection Award: “For leadership and heroism in preventing illegal trade.”

UÊThe United Nations Environment Program’s Montreal Protocol Partners Award: “In recognition of your successful partnership with the Parties to the Montreal Protocol in the global effort to protect the ozone layer.”

Counterfeit CFCs in HCFC-134 bottle (right) and genuine product (left), Manila, Philippines. © EIA

© EIA

11

2007 ANNUAL REPORT

ENVIRONMENTAL INVESTIGATION AGENCY

2007 Highlights Since the 1990s EIA has worked with U.S. government agencies including the Department of Justice, FBI, and U.S. Environmental Protection Agency, to eliminate illegal trade in ozone-depleting chemicals. In 2006, the U.S. EPA acknowledged EIA as “remarkably brave and successful in exposing illegal trade and use of ozone-depleting substances, in motivating policy makers to take action, and in providing assistance to combat smuggling operations.”

This background bore fruit in 2007 when EIA leveraged its high-level contacts to persuade the U.S. to take a leadership role in efforts to accelerate international phaseout of HCFCs and HFCs. Specific achievements included: » Testifying before the U.S. House of Representatives Committee on Oversight and Government Reform on how the international community could use the forum of the Montreal Protocol to take effective policy actions on climate change.

In particular, we stressed the significant benefits of an accelerated HCFC phaseout on combating global warming. » Leveraging our influential report, Turning Up the Heat, to instigate and influence formal proposals by the U.S. and a group of developing nations to accelerate the planned global phaseout of HCFCs under the Montreal Protocol.

WASHINGTON, DC

» Facilitating a formal global agreement in September 2007 by the 191 Montreal Protocol member nations to accelerate phaseout of HCFCs from 2030 to 2020. If implemented, the impact on keeping our world habitable would be momentous.

Greenhouse gases equivalent to some 20 billion tons of carbon dioxide would be kept from reaching the atmosphere — an amount equal to the annual emissions produced by the entire worldwide burning and flaring of fossil fuels. » Produced a briefing, Facing the F-Gas Challenge: The Need for a Global Phase-out of HFCs, for distribution to government delegations at the December meeting of signatories to the U.N. Framework Convention on Climate Change in Bali. This highlighted the growing production and use of man-made fluorinated gases with high global warming potential, and argued for their urgent phaseout and replacement with climateand ozone-neutral chemical alternatives.

EIA’s year-long education of Kyoto Protocol delegates, prominent NGO groups such as the Climate Action Network, and the media on the HCFC/HFC issue put the subject firmly on the agenda at the Bali meeting.

» In December 2007, EIA was interviewed about the impact of HCFCs and HFCs on global warming by the prominent National Public Radio program, All Things Considered.

© NOAA

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PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

FINANCIALS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2007 (AUDITED) EIA Inc. — Washington, D.C. UNRESTRICTED

TEMPORARILY RESTRICTED

TOTAL

CONTRIBUTIONS

$265,655

$244,000

$509,655

CONSULTING INCOME

$291,435

—

$291,435

($45)

—

($45)

$13,711

—

$13,711

$222,074

($222,074)

—

$792,830

$21,926

$814,756

FOREST CAMPAIGN

$219,956

—

$219,956

CETACEANS CAMPAIGN

$204,888

—

$204,888

GLOBAL CLIMATE CAMPAIGN

$66,482

—

$66,482

ELEPHANTS CAMPAIGN

$14,688

—

$14,688

$506,014

—

$506,014

MANAGEMENT AND GENERAL

$85,566

—

$85,566

FUNDRAISING

$40,720

—

$40,720

$126,286

—

$126,286

TOTAL EXPENSES

$632,300

—

$632,300

CHANGES IN NET ASSETS

$160,530

$21,926

$182,456

NET ASSETS, BEGINNING OF YEAR

$166,604

$102,183

$268,787

NET ASSETS, END OF YEAR

$327,134

$124,109

$451,243

REVENUE AND SUPPORT

INVESTMENT LOSS OTHER INCOME NET ASSETS RELEASED FROM RESTRICTIONS: SATISFACTION OF PROGRAM RESTRICTIONS

TOTAL REVENUE AND SUPPORT

EXPENSES PROGRAM SERVICES

TOTAL PROGRAM SERVICES

SUPPORTING SERVICES

TOTAL SUPPORTING SERVICES

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SOURCES OF REVENUE AND SUPPORT 2007 ANNUAL REPORT

ENVIRONMENTAL INVESTIGATION AGENCY

BREAKOUT OF CONTRIBUTIONS WASHINGTON, DC

FINANCIALS (CONTINUED) CONTRIBUTIONS 63% CONSULTING INCOME 36% OTHER 1%

SOURCES OF CONTRIBUTIONS 63% REVENUE AND SUPPORT CONSULTING INCOME 36% OTHER 1%

BREAKOUT OF CONTRIBUTIONS

BREAKOUT OF INDIVIDUALS 50% CONTRIBUTIONS

FOUNDATION GRANTS 38%

NGO/INSTITUTIONS 12%

PROGRAM AND OPERATING EXPENSES

CONTRIBUTIONS 63%

INDIVIDUALS 50%

CONSULTING INCOME 36%

FOUNDATION GRANTS 38%

OTHER 1%

NGO/INSTITUTIONS 12%

BREAKOUT OF INDIVIDUALS 50% CONTRIBUTIONS

FOUNDATION GRANTS 38%

NGO/INSTITUTIONS 12%

PROGRAM AND PROGRAM SERVICES 80% OPERATING EXPENSES FUNDRAISING 6%

MANAGEMENT & GENERAL 14%

PROGRAM AND OPERATING EXPENSES

BREAKOUT OF PROGRAM SERVICES

INDIVIDUALS 50% FOUNDATION GRANTS 38% NGO/INSTITUTIONS 12%

PROGRAM SERVICES 80% FUNDRAISING 6% MANAGEMENT & GENERAL 14%

PROGRAM AND PROGRAM SERVICES 80% OPERATING EXPENSES FUNDRAISING 6%

MANAGEMENT & GENERAL 14%

BREAKOUT OF PROGRAM SERVICES 14

BREAKOUT OF FORESTS 44% PROGRAM SERVICES SPECIES 43%

GLOBAL CLIMATE 13%

PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2007 (AUDITED) EIA Inc. — Washington, D.C. ASSETS CASH AND CASH EQUIVALENTS ACCOUNTS AND CONTRIBUTIONS RECEIVABLE, NET INVESTMENTS DEPOSITS AND PREPAID EXPENSES PROPERTY AND EQUIPMENT, NET

TOTAL ASSETS

$328,077 $53,628 $103,228 $2,500 $495

$487,928

LIABILITIES AND NET ASSETS LIABILITIES ACCOUNTS PAYABLE AND ACCRUED EXPENSES

TOTAL LIABILITIES

$36,685

$36,685

NET ASSETS UNRESTRICTED UNDESIGNATED

$241,873

BOARD DESIGNATED RESERVE

$85,261

TOTAL UNRESTRICTED

$327,134

TEMPORARILY RESTRICTED

$124,109

TOTAL NET ASSETS

$451,243

TOTAL LIABILITIES AND NET ASSETS

$487,928

15

2007 ENVIRONMENTAL INVESTIGATION AGENCY 2007ANNUAL AnnualREPORT Report: EIA Washington, DC

WASHINGTON, DC

SUPPORTING SERVICES: GROWTH AND DEVELOPMENT In 2007, EIA’s total revenue and support amounted to $814,756, as compared to $532,142 in 2006. The primary sources of this revenue were grant-making charitable foundations, individual donors, and consulting income. Other sources of revenue and support were non-profit institutions and investment income. Notable factors to highlight regarding EIA’s 2007 revenue and support: UÊ 53.5 percent of EIA’s 2007 revenue and support came from new sources of funding raised by EIA. UÊ EIA spent just 5 percent of its revenue and support on fundraising and 10.5 percent of its revenue and support on management and general expenses.

EIA provided timely reports and other updates throughout the year to its funders. These included formal written narrative and financial reports, as well as other written updates on progress made in the organization’s environmental campaigns and important organizational developments. EIA also provided copies of its new printed publications, DVDs of campaign videos, and copies of press articles covering EIA’s work to its funders.

To better communicate and market the organization’s work on the Internet, in 2007 EIA developed and launched a new Web site: www. eia-global.org. The site includes overviews of EIA’s mission, history, awards, landmark achievements, and environmental campaigns;

latest news updates; and free public access to electronic versions of EIA’s public education materials, such as issue-specific campaign reports and videos, and press releases. The site also features a dedicated donation page allowing the public to make secure online donations, and describes other donation options. Additionally, it features a “Subscribe” page allowing members of the general public who are interested in receiving free periodic updates on EIA’s work to submit their contact information to EIA.

Merbau tree, Indonesia © EIA

“EIA is unique and invaluable in baring the truth about an ugly business — illegal logging. No other organization goes where EIA goes, finds the proof that EIA finds, and uses that proof as effectively.”

CAROLINE D. GABEL, PRESIDENT AND CEO The Shared Earth Foundation

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PROTECTING THE ENVIRONMENT WITH INTELLIGENCE

PEOPLE AND DONORS EIA, Inc. is a 501(c)(3) non-profit organization based in Washington, D.C. Our small but dedicated staff works tirelessly to protect endangered species and the natural world.

CHIEF ADMINISTRATIVE PERSONNEL PRESIDENT Allan Thornton EXECUTIVE DIRECTOR Alexander von Bismarck MANAGING DIRECTOR Danielle Grabiel

BOARD OF DIRECTORS Myra Best Susan Fountain Allan Thornton Pam Wellner Durwood Zaelke

DONORS Blue Moon Fund The Charles Delmar Foundation Institute for Governance and Sustainable Development Jebediah Foundation The entire John P. McBride Family and the ABC Foundation Kinnoull Foundation Lord Ashcroft Foundation Marquis George MacDonald Foundation, Inc Michael Piuze Robert & Patricia Switzer Foundation Leadership Grants Program Shared Earth Foundation During 2007, EIA also received the support of a number of generous individuals, charitable foundations, and non-profit institutions that wish to remain anonymous.

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environmental investigation agency

EIA — WASHINGTON, DC PO Box 53343, Washington, DC 20009, USA T E L + 1 202 483 6621 F A X + 1 202 986 8626 E M A I L info@eia-global.org www.eia-global.org

EIA — LONDON 62/63 Upper Street, London N1 0NY, UK T E L + 44 (0) 20 7354 7960 F A X + 44 (0) 20 7354 7961 E M A I L ukinfo@eia-international.org www.eia-international.org

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