When legal does not always equal sustainable(1).
Like many commonly used natural resources, there is an ever-growing demand for timber and timber-derived products all over the world. And like many such natural resources, there is a deficiency in appropriate governance for this sector, which leads to increasing instances of illegal logging and trading. This is a major concern for the environment for many reasons:
- Deforestation and forest degradation accounts for 20% of global CO2 emissions
- Illegal logging contributes to detrimental environmental impacts such as desertification, soil erosion, and the exacerbation of weather events such as flooding
- Forest environments provide many benefits to surrounding ecosystems and humankind by enhancing biodiversity while providing a resource of forest products (2)
A great way to mitigate these impacts and optimize our precious natural resources is through robust legislation: The European Union Timber Regulation, (EUTR) came to fruition as a cost-effective way to combat the problem of illegal logging, while complementing actions and commitments already established by the United Nations Framework Convention on Climate Change. This legislation applies to timber that originates both from the domestic market in the EU as well as from non-EU countries. It acts as a means to ensure that timber and timber products entering the European Union have been produced in accordance with the national legislation of the original country.(3)
Although March 3, 2015, marks its two-year anniversary of having been in force, there are differing opinions on how well this legislation is working. Various stakeholders such as the World Wildlife Fund, Chatham House and others in the industry are concerned that its current impact and methods of enforcement are not effective enough, and that significant supplies of illegal timber are still slipping through the cracks of the system. While the legislation will be undergoing review later this year, there is a need for clarity to really mitigate illegal logging practices on a global scale.(4)
How does the EUTR actually work?
EUTR puts obligations on businesses who trade in timber and timber related products. Operators who are responsible for placing timber and timber products on the European market must gather information on their supply and assess the risks. The Traders who supply the products must be able to provide accurate records of exactly where the timber originated (obligation of traceability). The European Commission provides ways for the operators to comply with the EUTR through approved monitoring organizations that can perform periodic checks and help implement a due diligence system.(5)
How is the EUTR enforced?
Due to the fact that this legislation impacts multiple countries in the EU, it is difficult to create a standard of enforcement, which will inevitably lead to uneven enforcement amongst countries. For example, Germany and the UK are two of the 20 countries that have started to establish a set of competent authorities, rules, and penalties to ensure that entities are indeed abiding by EUTR legislation. However, this does not mean it’s foolproof: Recently, the UK competent authority found non-compliances of the EUTR with 14 out of 16 companies that had imported plywood from China. By now, companies should already be wary of the risks associated with these sorts of imports, but tracking the origin of wood along the supply chain is not always an easy feat. In cases like these, companies were issued a ‘Notice of Remedial Action’ with issues they need to address and failing to do so will lead to prosecution. While it is a positive sign that regulations and enforcement mechanisms exist within countries, it is still extremely necessary for the EU to also step in and help establish consistent implementation of the legislation across all EU countries – and quickly.(6)
However, with such market-focused legislation, there is inevitable concern amongst policy makers on how the EUTR impacts European timber trade. There is a lack of consistent assessment and application; compliance measures are either not cost-effective enough or not operationally viable for all scopes of timber product manufacturers, suppliers, operators, and wholesalers. For now, the relative stability of tropical wood imports, for example, is one outcome of the legislation (see Figure 1(7)). However, scientists worry that imports may be directed to EU countries with poorer records of timber trade, thus making it easier to bring in potentially illegal wood. It is imperative that research and monitoring continue to be enforced, so as to maintain and control the timber market while sustaining our precious forest resources.(8)
We are hopeful that a revised and robust EUTR will make progress toward clarifying the roles of stakeholders, consistent enforcement, and the ongoing promotion of the sustainable use of our natural resources the goal of truly sustainable procurement for forestry products. By thinking in the long-term rather than the immediate term, and by reviewing the EUTR to support and reflect sustainable procurement as well as legal wood supply, our forests can continue to thrive and benefit the earth and humanity as a whole.(9)
Author: Maureen Loman, Analyst at EcoVadis
EcoVadis is the CSR rating platform for supply chains spanning 150 sectors and 110 countries of Global-500 enterprises like Verizon, Coca Cola Enterprises, Johnson & Johnson and 120 others. EcoVadis Scorecards make it easy to understand, track and improve suppliers’ environmental, social and ethical performance. www.ecovadis.com