This is a report on the first phase of CIFOR's research project on testing criteria and indicators (C&I) for the sustainable management of forests, which was initiated in August 1994. The project has sought to identify reliable, relevant and cost-effective C&I based on field evaluation of existing sets under forest management unit (FMU) conditions in Germany, Indonesia, Côte d'Ivoire and Brazil. These evaluations were carried out using an inter-disciplinary and iterative approach developed by the project. This method is based on balancing the use of an inter-disciplinary team of experts and consultations with relevant stakeholders to evaluate C&I within the frame-of-reference of a particular FMU. It has also been used successfully in an independent test carried out in Austria. Results from the field tests in Indonesia, Côte d'Ivoire and Brazil suggest that more than half of the C&I related to policy and legal frameworks, ecological impacts, and production aspects were common to all three sites. There was however a marked and sharp decrease in this level of commonality when it came to C&I related to the social aspects of forest management. Comparison of these results with those obtained from the test in Austria reveal that most of the C&I identified as being common to the three tropical sites were also listed in the Austrian set. This suggests that at least in closed forest formations the development of a common "core" set of C&I seems possible, however site-specific elements will continue to remain important particularly for social aspects and lower levels of hierarchy, such as verifiers. In the second phase of the project, of two years duration, the aim is to develop a "toolbox" approach to sustainability assessment at the FMU level. This will include giving special attention to criteria and indicators identified as being weak during the first phase. Examples of such areas of weak C&I are impacts on biodiversity and social sustainability. The research will continue to focus on improving C&I especially with regard to their cost-effectiveness and reliability. In addition the project will test C&I in forests managed by local communities, thereby adding variation to both the question of spatial scales and management objectives.