A recent study published by Forest Trends, based on a survey of forestry professionals, has revealed the varied successes and stumbling blocks generated by the European Union Timber Regulation (EUTR) since its introduction in 2013.
The questionnaire, completed by 72 timber ‘Operators’ and ‘Traders’ of various corporate sizes; ranging from under 10 employees to over 250 from within the single market, provides an insight into the efficacy and changes initiated by more stringent timber control.
What appears to be one of the great successes of EUTR, has been the increased knowledge of company supply chains, which has led to the “systematisation of their sourcing approach including…specific risk assessments and prohibited species lists.”
When first formulated, EUTR represented a groundbreaking expansion of corporate responsibility in the wood industry, requiring companies to examine their own supply chains and mitigate the risk of illegality until it becomes negligible.
In the past, operators moving wood into the EU have placed an overwhelming reliance on third-party certification schemes, such as FSC and PEFC, to mitigate risk and comply with EUTR. This is problematic, as although wood genuinely sourced from third party certified forests in countries with good forest governance will be legally harvested, these schemes are less able to guarantee full compliance to national forestry laws and full supply chain integrity in countries where forest governance is weak. An annual audit of forest management and chain of custody against a certification standard by an external auditor is no substitute for an effective national system of forest regulation.
The dangers of placing too much emphasis on FSC certification have recently been placed in the spotlight following a report published by the environmental watchdog Earthsight. The report ‘Flatpacked Forests’, asserted that IKEA had been sourcing illegally harvested and unsustainable wood from the Ukraine that was nonetheless FSC certified.
Consequent allegations of ‘greenwashing’ and a lack of transparency in its auditing process have led many ENGO’s, including Greenpeace, to withdraw their support from FSC, damaging the certifiers credibility. Therefore reliance on FSC third-party certification as the “main mitigation tool” in risk assessments is now widely regarded as unacceptable.
As a result, industry professionals participating in the Forest Trends study now incorporate a plethora of risk assessment tools: “with most using a combination of tools such as Preferred by Nature’s (formally NEPCon) Sourcing Hub and the Transparency International’s Corruption Perception Index”.
Dynamic Supply Chains
The survey shows that use of more detailed risk assessments has led to the “flagging” of supply chains from countries considered potential sources of illegality. For example, imports of tropical timber products from Brazil now tend to be evaluated as high risk due to: “a deteriorating political context and international media coverage”, requiring far-reaching mitigation actions.
Most frequently cited as failing to meet due-diligence requirements is teakwood. Sustainable Wood has already published an article on the destruction of the teakwood forests in Myanmar, where previous junta regimes have exploited the highly sought after timber to bolster its failing economy.
The initiative taken by many Operators to avoid illicit wood is a clear sign of expanded corporate responsibility and growing awareness that illegal supply chains will attract the attention of regulators and ENGO’s. Therefore, the mitigation of risk is clearly seen by many of the surveyed companies as increasingly vital to sourcing policy.
However, the survey also highlights some shortcomings of EUTR, chief among which is uneven enforcement of regulations between member states. The inability of the EU to enforce its import restrictions becomes painfully clear in the aforementioned cases of teakwood from Myanmar and IKEA’s sourcing from Ukraine. One Operator voiced their concern that it appeared: “counter-intuitive to ask companies to conduct Due Diligence when the resources to enforce it are not available.” The survey revealed that several suppliers in the EU are continuing to offer cheap and undocumented wood, whilst others are bearing the expense of implementing and understanding the EUTR regulations.
Overall EUTR appears to be stimulating positive change in the European timber sector by encouraging firms to risk assess their supply chains and understand their responsibilities regarding due-diligence.
Although there are clear issues with the regulations, such as its complexity and the inability of the European Union to enforce it universally, it is fair to surmise the EUTR still represents a major step forward in ensuring sustainability of European supply chains.