Big brands back EU battle against illegal timber

Some of Europe’s biggest consumer brands in timber products not only back the EU Timber Regulation and wider anti-illegal timber measures, they want them to be tougher and wider ranging. Timber sector journalist and commentator Mike Jeffree reports.

There’s a fairly widely held perception that the EU Timber Regulation (EUTR), and wider
 EU Forest Law Enforcement, Governance and Trade Action Plan (FLEGT), were anti-illegal trade measures imposed on a reluctant timber industry. It’s understandable, given the portrayal of the sector by some as reactive rather than proactive on environmental performance, and particularly tackling illegal logging.

However, a different picture emerges from the perspectives of three of Europe’s best known consumer-facing timber and wood products companies; global home product retailer, IKEA, UK home improvement leader (and part of the wider Kingfisher group), B&Q, and Swedish-based international flooring giant, Kährs.

There’s no denial that illegal trading remains a problem. But they insist that they and the majority of the timber sector are as committed to eradicating it as anyone – and not just for the sake of image, or because it undercuts legitimate business. Hence the industry’s earlier adoption of its own responsible procurement policies, not to mention third-party environmental certification.

“Naturally we care too about green issues; forests, habitat, biodiversity,” said IKEA Global Forestry Manager Anders Hildeman. “At IKEA it’s absolutely embedded and central to corporate social responsibility (CSR).”

Kährs Environmental Sustainability Ambassador Bruce Uhler expressed similar sentiments. “The forests and people at the sharp end who depend on them
 are core concerns for us. In fact,
our unequivocal environmental stance is one reason people join 
us. For the millennial generation, it’s a prerequisite to recruiting new talent.”

So, far from passive players who had to be dragged through the EUTR, Ikea, B&Q and Kährs say they embraced it enthusiastically. More significantly still, they now want it developed and reinforced.

Training and Communication
All three have the complexity of dual status under the EUTR being both ‘operators’, which first place timber on the EU market,
and traders, which sell it on. But 
it did not require major revision of their anti-illegal timber strategies. Illegality risk assessment and due diligence were already integrated into their operations, and they are also all working towards 100 percent certified sustainable sourcing.

What the EUTR did do, however, was prompt renewed scrutiny and reappraisal of existing systems and a step up in communication on illegality risk. Hildeman adds: “The regulation has specific due diligence requirements we had to accommodate. We also undertook extensive EUTR training and, I believe, it also helped us strengthen legality messages to suppliers.”

Supply chain communication is a B&Q focus too. “EUTR made proof of legality harder, especially for paper-, chip-or fiber-based products due to complex supply chains,” said B&Q Sustainability Manager- Products Julia Griffin. “But the more we ask suppliers questions, the easier obtaining information and risk assessment becomes.”

Further proof provided of the overall effectiveness of their existing legality controls is that none of the companies had to axe suppliers post EUTR. “We pre-empt problems later by being clear on legality requirements with them from the outset,” said Uhler.

“Occasionally we’ve stopped sourcing from companies when documentation is inadequate,
but we work with them and
 restart trading when problems
 are resolved,” added Hildeman. “I understand some operators dropped suppliers where due diligence was particularly challenging, but that wasn’t the EUTR’s objective. It disincentivizes suppliers from raising legality standards in places which need most support. It’s an area the EU should examine.”

What B&Q believes the European Commission (EC) should also now do is assess the EUTR’s performance
to date and publish the findings. “Currently there’s insufficient data on its impact on illegal logging and illegal trade flows into the EU,” said Griffin. “It’s vital to improving its operation and something we hope we’ll get from the EC’s current EUTR review.”

Enforcement issues
One area where there’s solid consensus that the EUTR is not where it should be is enforcement uniformity. “There’s wide variance between member states in levels of scrutiny and requirements of Competent Authority (CA) enforcement agencies,” said Griffin. “That risks distorting trade routes and accentuating unfair competition due to uneven policing and administrative and financial burdens of compliance.”

The disparity created particular confusion for smaller suppliers, but also problems for multinationals trying to centralize a uniform EUTR approach across member states. “It would also help suppliers and operators, and make the EUTR more effective, if the EC devised a way not to have 28 different due diligence systems across 28 EU states,” said Hildeman.

There are calls too for the EUTR to be dovetailed more closely with sustainability certification. “The EU’s stated aim is to support sustainable forest management, but with business obliged to apply the same EUTR due diligence to certified as uncertified products, interest in voluntary certification could drop,” said Griffin.

Hildeman believes that certification schemes, with “systematic chain of custody”, should be accepted as evidence of negligible illegality risk. He adds: “Clearly FSC and PEFC certified products can’t have carte blanche through EUTR due diligence, but
 a negligible risk classification is reasonable and logical. And it would allow the EU to focus on higher risk areas and what should be the EUTR’s prime target, large-scale illegal timber trading by organized crime.”

“Legality should be the base level requirement, with sustainability the natural next step – we should aim for both,” remarks Uhler.

Global approach
These international operations would also like to see closer alignment between the EUTR and its enforcement agencies, and anti- illegality systems elsewhere. Their prime targets are the U.S. Lacey 
Act and Australian Illegal Logging Prohibition Regulation (AILPR), but Japan’s Goho scheme and China’s embryonic legality system were also mentioned.

“If we harmonize legality definitions internationally, it could give all schemes momentum and create a ripple effect into other markets,” said Hildeman. “It would also further benefit the battle against organized crime, which operates in the illegal trade globally.”

Another recommendation is
 to reduce or end current EUTR product category exemptions. 
“We appreciate the operational difficulties of including all products when EUTR implementation remains a work in progress,” said Griffin. “But ultimately we want all wood products in scope so we’re not effectively running two (legality assessment) systems. It would make it more practical across larger product ranges.”

“Exemptions also send confusing messages to consumers and suppliers,” says Uhler.

The value of FLEGT VPAs
None of the companies are currently major tropical timber consumers, largely they say because of their product profiles and customers ’ tastes. But all urged even greater backing for tropical suppliers in meeting EUTR requirements.

“It’s reported that European tropical timber imports have declined since introduction of the EUTR, and the fact that they ’re seen as high risk of illegality and a due diligence challenge is clearly implicated,” said Hildeman.

“The tropics are experiencing some of the fastest deforestation, partly due to illegal logging, but mainly land conversion, so we need to support them in the marketplace to incentivize forest maintenance,” added Uhler.

It’s because of its particular focus on tropical areas that all three companies also want to see the EUTR-associated FLEGT Voluntary Partnership Agreement (VPA) initiative for supplier countries given added impetus. Under the programme, VPA signatory states undertake forest governance reform and establish legality assurance systems. In return, they can supply FLEGT-licensed timber, which is exempt further due diligence risk assessment under the EUTR.

As no FLEGT-licensed timber has yet been shipped, after several years of the VPA scheme’s existence, Griffin acknowledged it had not been front of mind at B&Q. “That’s not a criticism, we accept it’s a demanding initiative working in hugely challenging environments, and it has to be 100 percent water tight,” she said.
 At the same time, B&Q would now like to see information flow on VPA progress stepped up. Griffin said: “Ultimately we’ll be putting FLEGT-licensed timber on the market, so trade understanding needs to be developed, so we can get behind it and position it to customers.”

Hildeman agreed. “It is going to be a challenge to create market incentive for FLEGT-licensed timber, as it will depend on achieving a critical mass,” he said. “It can’t be
a market niche. Once those first countries start supplying licensed material, we need others following quickly behind.”

According to Griffin, it is important to communicate the benefits VPAs are already having on the ground in supplier countries, in terms of transparency, forest governance, and stakeholder engagement, another condition of the agreements. “Our customers pick up on social stories about supply chains,” she said. “They associate with them and subsequent purchases mean more.”

Uhler adds: “If we can communicate that FLEGT motivates suppliers to maintain their forest and supports livelihoods that pass down the generations, that’s a really powerful message.”

Hildeman believes that once FLEGT-licensed timber is available in the EU market, the initiative could also have value as evidence of risk mitigation under other market legality regulation, such as Lacey and the AILPR. That, in turn, would give it added impetus.

So his final statement, dispelling any last doubts that the timber sector is a reluctant partner in
the project, is that, the sooner outstanding issues in the EUTR are resolved and FLEGT-licensing up and running, the better.

“I don’t underestimate the challenges, but my message would be let’s get on with it!” concludes Hildeman.

About the Author
Mike Jeffree graduated
in history and economics from Cambridge University and holds a post-graduate diploma in journalism studies from City University in London. He has been a journalist for over 25 years, working for newspapers, magazines, broadcast and online media. He started to report on the timber and forestry industries in 1997 and was appointed editor of the world’s longest established publication in the sector, the UK’s Timber Trades Journal (TTJ) in 2001, a post he still holds today. He launched the magazine’s website, www.ttjonline.com,
 and its specialist construction title Timber
& Sustainable Building. He is also Communications Consultant to the European Timber Trade Federation, works with the European Forest Institute and Global Timber Forum and reports on sustainable construction for the Danish digital title Dagens Byggeri. He has written
 for the German-based international timber title Euwid and has traveled widely in the industry, reporting on business and market developments worldwide, from the Americas to South
East Asia.

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