Thémis continues to evolve

 

Photo: webpage timber market survey

Plans for phase II of the Thémis sustainable timber trade monitoring and benchmarking tool and portal have been revealed. They include increasing the number of European trade federations employing the tool and further improving the functionality of the system.

Thémis was developed by sustainable timber and forestry analyst and advisor Probos and IT specialist Graphius and launched in 2021. It was backed by the Programme for Promotion of Certified Sustainable Forest Management (PPECF) and IDH, the Sustainable Trade Initiative.

Users in its first phase were trade bodies Le Commerce du Bois of France (LCB), Fedustria of Belgium and the International Tropical Timber Technical Association (ATIBT). Their members use the tool to gather data on their sustainable timber procurement on an annual aggregated basis. It is then analysed and presented in various graphical formats, including dashboards, on the Thémis portal. The objective is to increase transparency on levels of sustainable procurement, and to enable trade bodies to monitor progress in this area among members, to set sustainable purchasing goals and target interventions to help companies and federations achieve them.

Individual companies themselves can in turn benchmark their progress relative to fellow trade body members and ideally against targets set by federations and use this to set their own targets.

Probos Director Mark van Benthem said the data collection and analysis can also have market benefits for Thémis users. The environmental commitment and support for sustainable forest management it demonstrates, he maintained, can differentiate trade body members from non-members, while the openness it shows further builds buyer trust.

One of the early adopters, LCB, is linking the Thémis tool to its new environmental charter and will make its use mandatory for members, with a ‘quantified objective’ in sustainable procurement collectively adopted.

Growing the Thémis user base in phase II, says Probos, will increase its impact.

‘The more countries and organizations commit to responsible sourcing and embrace reporting via Thémis, the larger the impact on forests,” it states. “Enlarging the number of users also increases timber market transparency, which enables further analyses.”

Early in 2022 the Royal Netherlands Timber Trade Association (NTTA) and Netherlands Woodworking Industries Association (NBvT) adopted Thémis, with tailoring of the system to their needs underway. Plans for phase II also include building in extra Thémis features. These would be intended to give companies and Timber Trade Federations more insight in procurement developments and ‘make it more appealing for companies to submit their data in Thémis’.

In addition to the online dashboard presentation of data in the Thémis portal, users will also have the option of downloading a PDF ‘statement’ or ‘testimony’ presenting the development of their sustainable procurement over the year. Companies could then post these documents on their websites.

Fair&Precious Partners in the spotlight: Stratémark

 

Photo: CIFOR

 

In the latest of our interviews with Fair&Precious partners, we ask Bertrand Faucon, founder of Stratémark of France, about the company and its perspectives on the challenges and opportunities of the tropical timber sector.

 

STTC/F&P newsletter: How would you describe Stratémark?

Bertrand Faucon: Stratémark is a marketing consulting agency, created in Normandy in 1986, specializing in the fields of the environment and tourism.

 

STTC/F&P: Why did you become a partner of Fair&Precious and what do you think it can achieve ?

BF: We had the opportunity to contribute to the creation of the Fair&Precious brand in 2017 and immediately adhered to the values of its founder, ATIBT, and other companies committed to sustainable forest management.

FSC or PEFC-PAFC certified forest managers make considerable efforts to preserve resources and biodiversity and contribute to economic and local development. And I believe we must convince the public and consumers of the existence of this exemplary model for preserving forests, while at the same time taking advantage of this fantastic material that is wood.

 

STTC/F&P: The European tropical timber industry has struggled to retain market share in recent years. What do you see as its main challenges?

BF: We must first eradicate illegal timber from all markets, including in Africa. Legality compliance is a first step. And on that continent, our goal must be to engage as much of the Congo Basin as possible in sustainable management. Then you have to convince buyers and the general public that wood is the most ecological, valuable and attractive material that exists.

 

STTC/F&P: Do you think the tropical timber sector can rebuild its presence in Europe?

BF: Yes, most certainly. But for that, we must not set objectives of volume but rather of quality. The right wood for the right use. Tropical woods, for example, have natural advantages without chemical treatment. They also offer an incomparable variety of aesthetics.

 

STTC/F&P: In which markets do you see greatest opportunities for growth in sales of sustainable tropical timber?

BF: Marine engineering or hydraulic applications of course are key. But also the field of construction in general and luxury manufactured goods. The decking market should also remain an important tropical timber user and ATIBT’s ambition is to recover certified tropical wood’s market share in flooring.

 

STTC/F&P: Do you see new applications opening up for sustainable tropical wood in the future?

BF: I can see particular prospects for developing its use in the healthcare sector and retirement homes. The positive impacts on health and the well-being benefits of wooden interior environments is now widely documented.

STTC/F&P: Do you think it is important to increase the demand for lesser known sustainable tropical timber species and if so, how do you think this can be achieved?

BF: It takes time to introduce secondary species to the market because you have to carry out technical tests and then convince buyers they should try them. But it is necessary to diversify our species use to reduce supply pressure on the best known species.

 

STTC/F&P: What would be your sales pitch for sustainable tropical timber – how can the trade persuade consumers and professionals to specify it, buy it and use it?

BF: From my point of view, you should only promote FSC and/or PEFC-PAFC certified wood. In developing its use, not only do we not participate in deforestation, but on the contrary we contribute to protecting the forest by giving it value. In my opinion achieving these certification standards in tropical countries is even more demanding than in Europe. Fair&Precious forest managers in the tropics, for instance, have very strict obligations in terms of the fight against poaching and in supporting social development. We have to support them.

 

STTC/F&P: Looking at the challenges and opportunities, are you optimistic about the future of the sustainable tropical timber industry and trade?

BF: I am naturally optimistic. Both because nature always wins out and because, I hope,  younger generations will behave more and more like environmental protectors and not like predators. We must also favour renewable materials such as wood, while not harvesting more than the forest can sustainably provide.

We simply have to come to our senses, obviously combating illegal logging, but not embargoing use of tropical timber. Wood is obviously the material of the future and within the timber market, tropical wood clearly has its place.

New timber CITES listings criticised

 

Photo: Mark van Benthem, Stichting Probos

Question marks have been raised by leading Belgian academic and research body, the Gembloux Agro-Biotech faculty of the University of Liege (GBA), over latest new timber species CITES listings. The listings were passed at the UN CITES COP in Panama (COP 19). They include Ipe (Handroanthus, Roseodendron and Tabebuia spp.) and Cumaru (Dipteryx spp.). Following a 24 month transition period, they will be included in CITES Appendix II.

The other new listings are Afzelia/Doussie (Afzelia spp.), Padouk (Pterocarpus spp.) and African Mahogany/Khaya (Khaya spp.). They will be listed, after a 90-day transition period from the initial announcement, from February 23 2023.

Under the CITES rules, international trade in these species can be authorised, but requires an export permit, or re-export certificate from the third-party country and an import permit issued by the appropriate body in the importing country. Listing has significant trading impacts, imposing administrative barriers to exporting and importing Appendix II classified species. For species newly listed on CITES, producing countries must publish their Non-Detriment Findings (NDTs), to establish trade quotas. This will take time and the 90-day deadline for some species may not allow producer states to do this.

For EU importing countries, the transitional phase until entry into force of the CITES listings is also likely to raise practical questions. For example, what is the status of goods already in transit without a CITES export licence, but which would arrive in the EU after February 23 2023? Further, Appendix II listing will also lead to administrative burdens because valid export licences often expire while importers wait for import licences to be issued by their state’s competent authorities.

Jean-Louis Doucet, Professor of Tropical Forestry at GBA and president of the Care Forest is Life project, was quoted as saying that, while additional management measures were justified for certain commercial species, this should not include Padouk and Doussié. He added that the first ‘victims’ of the new listings will be companies committed to sustainable management, including FSC or PEFC-certified companies that export part of their production to Europe. He said Gabon will be among the first supplier countries affected. “Gabon forestry companies been faced with a doubling of energy prices in six months, making exploitation of most forest species unprofitable. Currently, only a handful are still being harvested, including Padouk and Doussie. To restrict their international trade is to put a noose around the neck of good forest management students.”

Dr Grace Loubota, who implemented the CARE project, with funding from the Programme for the Promotion of Certified Forestry (PPECF), shared Professor Doucet’s concerns. “Neither Padouk nor Doussie are threatened and logging them will not jeopardise their populations in the coming century. Their population densities are sufficiently high and these two taxa regenerate without difficulty,” said Dr Loubota, adding that these timbers had been listed because of the ‘difficulty of differentiating them from species considered threatened’.

Professor Doucet said that the additional trading costs imposed by CITES listings of these species could also lead to supplier countries switching to cultivation and export of other commodities, such as palm oil. This risked further forest conversion. “This catastrophe that could be avoided if we finally recognised the real virtues of tropical woods, whose image has been tarnished by decades of misinformation,” he concluded.

CIP and prospects for small-scale forestry FSC certification

 

 

 

 

 

 

 

Photo: Mark van Benthem

 

 

 

 

 

 

The Forest Stewardship Council’s new Continuous Improvement Procedure (CIP) is a significant step forward. But further action could be taken to make FSC certification an even more viable option for small and micro community and family forest operations. This was the view expressed by Jens Kanstrup of Forests of the World in an FSC podcast in which he discusses the CIP with Vera Santos, FSC Programme Manager Community and Family Forests, and host Loa Dalgaard, Strategic Director of FSC Denmark. The CIP launched last year and is described by FSC as a stepwise approach toward forest management certification, specially designed for community and family forests.

Under the procedure, organisations managing community or small or low intensity managed forests (SLIMF) can achieve FSC conformity by initially implementing a subset of its criteria. At the same time, they draw up an action plan to adopt other criteria of the applicable FSC standard progressively over five years. “This simplifies their certification journey to give an opportunity to continuously improve their sustainability objectives in forest management and reduces their initial certification costs,” states FSC. “Additionally, the procedure includes an Action Plan and Conformity Self Check which can be used immediately by organizations to develop action plans to enhance their forest management practices.” At the same time, it adds, it is simplifying its standards to facilitate the step-by-step process and introducing more culturally adapted auditing. “The aim is for use of local experts to guide operations rather than experts from another reality,” said Ms Santos. “They can translate FSC requirements to local environments and help forest management understand the rationale of FSC rules and what it needs to see.”

Mr Kanstrup welcomed the CIP, but said the cost of certification for small and micro forest operations remain disproportionate and a barrier to uptake. He also said that, even under the CIP, they would ultimately have to comply with the full range of FSC principles and criteria, albeit over five years. He felt those for community and family forest operations could be further simplified and reduced. “As they may not be involved in certain site disturbing activities like skidding, they may only comply with some parts of FSC criteria on forest impacts,” he said. “Others should be silenced.”

He also said the fact that FSC principles and criteria were initially developed to suit specific forest models, such as those in Europe and the US, needed to be further addressed. “For example Principle 10’s rules on silvicultural practice are mostly designed for the European and US plantation forest model, addressing how to minimise damage from that type of management,” said Mr Kanstrup. “But for community forest in Bolivia, [for instance] with its low intensity management and small volume extraction, most of Principle 10 is irrelevant and shouldn’t be included in certification. It’s not about lowering the bar, but setting it in the right place.” He added that the FSC’s ecosystem services procedure should also be made more accessible for small forest operations. He concluded that the CIP alone would not solve all the issues of small scale forestry certification and that further adaptation of FSC criteria and principles is necessary.

Ms Santos said she was optimistic on the issue. She noted that CIP was now in the implementation support phase, but that the FSC was still navigating new waters with the Procedure and ‘ready to course correct quickly’.

Click here to listen to the FSC podcast.

IMM project completes its activities

The tropical timber-focused EU Forest Law Enforcement Governance and Trade Independent Market Monitor (IMM) has wound down after nine years’ operation. The IMM launched 2014 with the objective of tracking timber trade flows from supplier countries in FLEGT Voluntary Partnership Agreements with the EU, setting these in the context of the wider tropical timber market. Its role also included gauging market views and influence of the FLEGT Action Plan and FLEGT licensing. It was managed under contract to the EU by the International Tropical Timber Organization (ITTO), with this coming to an end as planned on December 31 2022.

During its operation, the IMM has undertaken quarterly analysis of international trade data from COMEXT, COMTRADE and other sources. This data has been ‘cleaned’ using a specially developed algorithm and presented on the IMM online Data Dashboard and the more detailed STIX (Sustainable Timber Information Exchange) website. From 2017 to 2022 IMM correspondents have undertaken around 800 interviews with EU timber importers and traders, with the results published in annual reports and newsletters.

Key conclusions from IMM research included:

Positive:

  • The green lane for FLEGT-licensed timber has made importing from Indonesia easier for EU operators;
  • EU operators value the ‘zero risk’ status of FLEGT- licensed timber and give preference where other commercial product criteria are equal;
  • While IMM has not identified any significant FLEGT Licensing related growth in timber and timber product trade between Indonesia and the EU, FLEGT Licensing may have contributed to stabilising Indonesia’s market share in a difficult and competitive environment;
  • Indonesian stakeholders consider FLEGT to improve forest management and governance;
  • Indonesian stakeholders see an increasing role for SVLK/FLEGT Licensing at a global level due to the growing number of regulated markets;

Negative:

  • Inconsistent messaging and lack of endorsement and promotion may have created confusion about the value of FLEGT Licensing and affected market development;
  • Inconsistencies in EUTR enforcement may have created loopholes that may have weakened the green lane advantage;
  • FLEGT Licensing so far being limited to just one country and a limited number of products has affected market traction and awareness of FLEGT-licensed goods at various levels (e.g. uptake in procurement policies, green building codes etc.);
  • The EUDR is raising question marks over the value of FLEGT licensing.

Stakeholders at consultations in VPA countries and the EU hosted by the IMM through 2022 said its work had been of significant value to them. It had increased understanding of market impacts and perceptions of FLEGT licensing and VPAs and helped inform policy and business decision-making.

Participants from business, government and private sector at the consultations in Indonesia, Ghana, France, and Viet Nam also said, based on their experience of the IMM’s work, they’d like to see some form of EU FLEGT independent market and trade monitoring continuing into 2023 and beyond. The implementation of the EU’s Regulation on Deforestation-Free Commodities and spread of timber legality import regulations in other consumer markets globally made it potentially more relevant still.

The IMM website (www.flegtimm.eu) is no longer maintained. However, IMM’s collected outputs will remain available online. In the near future the STIX database will be maintained by the ITTO at www.itto.int.

New global partnership announce bold forest aims

Photo credits: Pixabay

For those who have missed it, one of the key development for forested counties was the announcement of the formation of the Forest and Climate Leaders Partnership (FCLP) on COP 27. This is an alliance of forest and consumer countries formed with the aim of maintaining forest cover worldwide as part of the effort to limit global warming to less than 1.5°C above pre-industrial levels. Among the FCLP’s roles, states the UN Climate Change News website, is to boost action to implement the commitment made by over 140 countries at COP 26 to halt forest loss and degradation by 2030.

Initially 27 countries have joined the FCLP – and members include both the EU and some of its individual states. NGO Fern points out that this represents less than a quarter of the number that signed up to the Glasgow Forests and Land Use Declaration. However, the UN says that the first FCLP members represent 60% of global GDP and 33% of the world’s forests and more are clearly hoped to join.

‘Action areas’ of the FCLP include mobilizing public and donor finance to help fund implementation of the Glasgow commitment, supporting indigenous peoples’ and community forest initiatives and incentivizing conservation of high-integrity forests. Other targets are to ‘strengthen and scale carbon markets for forests’ and to engage and ‘shift’ the private finance system in forest maintenance.

The FCLP is co-chaired by the US and Ghana, it will hold meetings and publish a Global Progress Report every year including assessments of global progress toward the 2030 forest loss goal. At the first FCLP meeting it was announced that Germany was doubling its finance for forests to $2 billion through 2025 and would support establishment of the Partnership’s secretariat. An additional $3.6 billion of private capital funding for the cause was also announced.

The establishment of the ‘loss and damage’ fund for developing countries was also heralded as key for helping developing countries maintain and restore forest cover, as well as helping mitigate other adverse social, health and well-being impacts of climate change. But the detail was fiercely argued. Notably the EU’s insistence that big economies still classed as developing countries under the UN Framework Convention on Climate Change rules should not be recipients of the fund. Poorer developing countries saw this as an attempt to divide them from bigger economies like China and opposed it. However a compromise was eventually struck by which vulnerable developing countries will be prioritized for funding and voluntary contributions can be made by the larger economies still categorized developing.

 

Fair&Precious Partners in the spotlight: Cross Trade

Photo: Cross Trade

In the latest of our interviews with Fair&Precious partners, we ask Klaus Schmidt, Managing Director of Cross Trade, about the company, its approach and perspectives on the tropical timber sector.

STTC/F&P Newsletter: How would you describe Cross Trade; who you are, what you do and what you stand for?

Klaus Schmidt: At just under 12 years old, Cross Trade is still a relatively young company, but, as part of the HIF/TT Group, we can trace our roots back to the 1990s. This gives the business extensive experience of trading exotic woods from around the world. Since those early days we have also been committed to supplying verified sustainably sourced timber and today support for legal and sustainable forest management is integral to our company. It’s in our genes and around 85% of our procurement is now certified wood.

STTC/F&P: Why did you become a Fair&Precious partner?

KS: Use of verified sustainable tropical wood helps ensure the existence of the sustainably managed forests where it comes from. But sustainable forest management can only be assured with the active involvement of the people who live there. The populations working and living in certified forest regions must be supported and derive benefit from forest management in terms, for example, of being given better access to goods and services, such as drinking water, sanitary facilities and electricity. Fair&Precious is an important partner in enabling us to communicate this better.

STTC/F&P: What would you say are the major challenges for the European tropical timber sector in holding on to its market share?

KS: If everyone involved recognizes the benefits and added value of verified sustainable tropical forest management and timber production, we can make a positive contribution to combating climate change. But this requires a social rethink in consumer markets to change perceptions around tropical timber. It’s a big challenge we must all face and as quickly as possible.

STTC/F&P: Do you believe the tropical timber sector can rebuild its presence in Europe?

KS: The total area of the world’s tropical forests is several times a multiple of temperate forest zones. The latter are also extensively sustainably managed so offer only limited potential in terms of providing more timber. However demand for wood products is set to increase further worldwide. So the proportion of the market served by tropical species will have to increase, although this can only happen, of course, if the forests are maintained through certified sustainable management.

STTC/F&P: In which market do you see greatest possibilities for growing sustainable tropical timber sales?

KS: I do hope in Europe, but we have to be careful not to miss the boat, given the growth potential of other consumer markets worldwide.

STTC/F&P: Do you see new applications opening for sustainable tropical timber in the future?

KS: There are already various approaches being taken to enable a broader use of different types of wood for new purposes. This trend will continue. Nowadays, many products, especially in the construction sector, are still made out of softwood. As is well known, the proportion of production forest will continue to decrease and we will have to consider whether smaller dimensions made out of exotic wood could provide the same technical benefits – so getting more use out of less timber.

STTC/F&P: Do you believe it is important to increase demand for lesser known tropical timber species?

KS: Sustainable forest management must be economically viable and this can only be achieved through appropriate pricing and at the same time cost-oriented production. The simultaneous use of lesser-known timber species can help ensure a cost-effective, commercially sound sustainable industry, while also taking the pressure off the primary types of wood.

STTC/F&P: What is your sales pitch for sustainable tropical timber?

KS: Unfortunately, many customers are still not aware of the complex issues of sustainable forest management and its importance in the context of the climate debate. As a result they are not solely focused on using certified wood. So it’s down to us as an industry to keep our customers happy through good quality and service and to gradually raise awareness of these subjects.

STTC/F&P: Are you optimistic for the future of the sustainable tropical timber sector?

KS: Very much indeed. All the arguments are in favour of more intensive use of verified sustainable resources and it is only a matter of time before these shape purchasing decisions in wider society.

Assessing STTC achievements and future prospects

Photo: CIFOR 

Next year the Sustainable Tropical Timber Coalition will celebrate its 10th anniversary, time to look at the impacts, lessons learned and where it might go from here especially with the departure of IDH as a principal funder.

The STTC aim is to support spread of sustainable forest management in tropical countries by ‘accelerating demand for certified or licensed timber in the EU through creating synergies between legality measures and sustainability efforts’. The premise was that the more verified sustainable tropical timber sold in the EU, the greater incentive there would be in supplier countries to implement sustainable forest management (SFM).

From 2012-2016 says Probos, the STTC built a coalition of private sector companies, national and local governments committed to furthering its aims. Among its roles were communication, facilitating networking and providing supply chain matchmaking.
The STTC supported European timber trade federations in development of nationwide policies for promotion and monitoring of sustainable tropical timber trade. It also backed individuals and organisations implementing action plans to increase demand for verified sustainable tropical timber and the lesser known timber species (LKTS) network.

STTC members rated its support for development of sustainable tropical timber procurement policies most highly, followed by STTC data studies on certified sustainable tropical timber imports in a survey. They felt that the STTC had greatest impact on ‘conservation and wise use’ of tropical forests, in influencing public perceptions on use of tropical timber and increasing understanding of the concept of verified sustainable.

IDH has now ended its funding for the STTC, leaving it looking for other means of support and an alternative ownership model. The evaluation mentions various ways forward, including donor and crowd funding, membership fees and merger with other organizations. On the question of how the STTC could contribute to conserving tropical forests into the future, respondents suggested it could lead a think tank on tropical timber and related issues including climate change and the role of small scale forest businesses. Other potential projects could be creation of a broader platform for producers and traders to communicate with consumers, further research into uses of LKTS and initiatives to strengthen European involvement in producer countries.

The evaluation acknowledges that continuing the STTC ‘either as a coalition/platform’ or as ‘an initiator of focused, project-like initiatives’ requires further investigation. But it concludes: ‘time spent on this is worth the effort and should be seen as an investment in the still very urgent objective of increasing demand for verified sustainable tropical timber to support sustainable forest management in producer countries’.

 

Tenders in for Paris Olympics Tali

Photo: Interholco

After Paris 2024 Olympics delivery authority Solideo dropped its ban on use of tropical timber in Games developments, suppliers have pitched to provide verified sustainable sourced Ttali for decking and other exterior fixtures. 

Initially Solideo had announced its block on use of both tropical and boreal timber from outside the EU in Olympics building and infrastructure projects in a document laying out its criteria for ‘environmental excellence’. Executive general director Nicolas Ferrand also said the aim of the ban was ‘to reduce as much as possible the carbon impact of the [Olympics] works’.

However, as previously reported in the STTC/Fair&Precious newsletter, this led to protests and intensive lobbying from the International Tropical Timber Technical Association (ATIBT) and others. They maintained that the ban would undermine both market confidence in certified sustainable tropical timber and the drive to encourage implementation of sustainable forest management in tropical regions.

Backed by French trade association, Le Commerce du Bois, the Programme for Promotion of  Certified Forest Operations (PPECF) and individual certified companies, the ATIBT put its case to Solideo and Paris Mayor Anne Hidalgo. It said that the ban ‘contravened the principle of free competition between products’. It also maintained that Solideo’s decision was not based on clearly defined environmental protection requirements and disregarded certified suppliers’ provision of chain of custody from certified sustainable forests.

In the face of this lobbying, the authority eventually dropped its ban and issued its call for tenders for the supply of 4,400m2 of decking, plus barriers, in Tali (or an equivalent timber) in June.

While the volume of timber in the call is not great relative to the scale of Olympics developments, ATIBT Managing Director Benoît Jobbé-Duval was quoted in a report from the Mediapart online news service as saying that the decision to allow use of tropical timber was nevertheless significant. “We were not fighting for a volume but for a symbol,” he said. “We wanted the door to be opened to a responsible consumption of wood coming from Central Africa.” ATIBT’s hope, he added, was that the Olympics would now bring ‘visibility and legibility’ to the cause of promoting use of certified sustainable tropical timber and, in so doing, support certified sustainable forest management.

Conditions for use of tropical timber at the Olympics include that it is FSC-certified and that new timber is matched by use recycled wood ‘of equivalent quality’. The material is also to be backed with life cycle analysis data (LCA). The ATIBT has issued an appeal to companies to inform it of available sources of recycled timber. It said it will also bring its expertise to bear on analysis of the supply chain for the tropical timber provided for the Games. “There is no doubt that a nice narrative can be made around this wood, whose social and environmental value must be highlighted and disseminated to the public, to, as some say, connect cities with forests,” it stated.

EU agrees law to fight global deforestation

Photo: CIFOR

Imports of commodities that contribute to deforestation are set to be banned in the EU following a preliminary agreement on the proposed EU Regulation on deforestation-free supply chains between the European Parliament and EU member states. Their approval of the Regulation is likely to follow early 2023.

The European Commission welcomed the provisional political agreement just reached between the Parliament and the Council. Once adopted and applied, the new law will ensure that a set of key goods placed on the EU market will not contribute to deforestation and forest degradation in the EU or elsewhere in the world.

The Regulation, commonly referred to as the EU Deforestation Regulation or EUDR, states that importers and non-SME traders of six so-called Forest and Eco-System Risk Commodities (FERCs) must undertake due diligence to ensure goods they place on, or export from, the EU market are not implicated in deforestation or forest degradation. These commodities are wood, cattle, cocoa, coffee, palm oil and soya (plus derivatives). The new Regulation also involves supplier countries being benchmarked low, standard and high risk, with the level of due diligence required for their commodities varying accordingly.

As far as wood is concerned, a key difference between the Deforestation Regulation and the EU Timber Regulation, which it would supersede, is that non-SME traders will also have to undertake due diligence. The EUTR differentiates between the responsibilities of operators (companies that first place timber on the EU market) and of traders (companies that subsequently make the timber available in the supply chain after it has first been placed on the market). In the EUTR, the only obligation on traders is to keep records of purchases and sales of timber for five years and to share them with competent authorities if requested. Only the operator, is obliged to investigate the legality of its supply chain. The Deforestation Regulation makes large traders subject to the same due diligence requirements as operators.

In addition, all traders including SMEs, need to collect and keep certain information relating to the operators or traders who have supplied commodities and products to them, as well as the traders to whom they supply commodities and products.

The status of FLEGT licensing also changes. A FLEGT Licence under the proposed regulation will continue to be accepted as proof of legality. However, it will no longer provide a due diligence-free pass, or ‘green lane’, for goods into the EU. Licensed timber and wood products will also have to undergo due diligence to ensure their production did not cause deforestation or forest degradation.

In addition, the new Regulation requires importers and non-SME traders of the commodities it covers to provide geolocation information for the plot of land from which they were derived. This has caused particular concern in the timber trade. Both European timber trade bodies, including the ATIBT, and the American Hardwood Export Council recently issued statements that it will create significant problems for small-scale forest owners and highly fragmented forestry operating models.

“Some operators with simple supply chains will have easy access to the necessary [geolocation] data,” said Christian Sloth of certification services and sustainability advisory body Preferred by Nature. “Others working with more complex products may face a serious challenge. Some may even be forced to change their entire sourcing model.”

The EU views the EU Deforestation Regulation as a key step in the fight against biodiversity loss and it is seen to be well-timed with the latest Conference on biodiversity. However, it has been pointed out that there are more (and timber competing) products that contribute to loss of biodiversity which are not (yet) covered by the Regulation. More importantly, say critics, there are more ecosystems, other than forests that need protection and not the potential pressure the Regulation may exert. These include savannahs and wetlands. Moreover, it is felt to be very important that the EU market also remains accessible to smallholders.

The European Parliament and Council will now have to adopt the new Regulation formally before it can enter into force. Once it is introduced, operators and traders will have 18 months to implement the new rules. Micro and small enterprises will enjoy a longer adaptation period, plus other specific provisions.