Illegal logging is a key driver of deforestation. The Global Forest Atlas estimates that over 20 million hectares of forest were illegally converted between 2000 and 2012. In many developing countries, the process of issuing licenses for land clearing is compromised by corruption and compliance logging boundaries are commonly breached.
Legislation that prohibits unlicensed logging is present in large consumer markets. The two most prominent regulations against illegal timber trade are in the EU and the US.
In 2008, the United States made amendments to the Lacey Act to include timber and in 2013, the European Union implemented the EU Timber Regulation (UETR, Reg. No 995/2010). While the Lacey Act focuses on a wide range of wildlife conservation efforts, the EUTR has a narrow focus on minimizing illegal timber from entering EU member states and to contribute to the global movement of sustainable forest management.
The EUTR has 3 main obligations:
- To prohibit the entry of illegally harvested timber on the EU market.
- To keep records of all timber that enters the EU market through due diligence performed by EU timber traders.
- To ensure risks associated with illegally sourced timber are identified and mitigated.
The regulation covers a wide range of timber products including solid wood products, flooring, plywood, pulp, paper, and other wood-derived products. The complete list can be found here.
EUTR Due Diligence
The goal of due diligence is to assess the risk of illegal timber being present in the supply chain and outline the steps taken to mitigate the risk of illegal timber from entering the EU market.
Due Diligence Process
The process flow of EU timber due diligence is similar to that of other special materials due diligence process flows (example – EU conflict minerals).
The process starts with supplier scoping. The goal of supplier scoping is to identify any suppliers in the supply chain that are either importers or are involved in the import process of the timber used in products heading to the EU.
Once scoping is complete, a detailed assessment is created that includes survey questions and secondary document collection. Acceptable documents include those that describe the timber and timber products, country of harvest, species, quantity, details of the supplier and information on compliance with national legislation as well as any certifications achieved.
Once suppliers have completed the assessment, key points of risk should be identified. Incomplete responses, false country of origin information, Inaccurate documentation on timber products, and inaccurate documentation on quantities are all examples of red flags, and appropriate next steps should be taken.
Through data collection and analysis, companies should have enough information to give a three-part overview of their process:
- Information that includes a description of the timber products placed on the EU market
- A detailed overview of their risk assessment and any findings that were uncovered during the due diligence process.
- A detailed overview of the risk mitigation process, if illegally sourced timber was uncovered.
If you sell products in the EU that contain timber or are a components supplier with timber in your products, make sure you have adequate documentation to support your legally sourced timber. Recent violations were issued by the Dutch Competent Authority that amounted to €1,800 per m3 of timber placed on the EU market.
If your company is covered by the EUTR, it is imperative that you have comprehensive sourcing information readily available for your customers or reporting. If you would like to speak with an expert, click here to contact us.