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PAGE 1
climate change and achieving sustainable
development. Illegal logging perpetuates
corruption, undermines livelihood...
PAGE 2
supply chain and provide evidence of legality
right back to the source of the timber along
with proof of due dilige...
PAGE 3
SUPPLY CHAINS IN FOCUS
community, with Greenpeace International
saying that, while the FSC faces challenges,
it con...
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IF timber briefing

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IF timber briefing

  1. 1. PAGE 1 climate change and achieving sustainable development. Illegal logging perpetuates corruption, undermines livelihoods, fuels social conflict, deprives governments of revenue and erodes countries’ natural resource bases. And it’s not just an issue for forest-rich countries; those that import and consume wood-based products contribute to the problem if they import products without ensuring that they are legally sourced. As a result, in the developed world – particularly the European Union and the US – regulations are in place to tackle illegal logging. In the EU, the 2013 European Timber Regulation (EUTR) requires anyone placing timber on the market to interrogate the entire Sustainability is a key issue for the timber industry, which has two possible paths it can take – either it can be a key contributor to a more sustainable world or it can be an industry that contributes to climate change through illegal land clearance and deforestation. Timber certainly has the potential to play a key role in tackling the construction sector’s huge carbon footprint, which amounts to 40% of the global total. Timber can be a carbon- neutral material if grown sustainably – it is widely recyclable and it can lock up carbon for decades when used as part of buildings, in contrast to other building materials such as cement, whose production is highly carbon-intensive. Building materials companies say that every cubic metre of timber used as a substitute for other building materials reduces CO2 emissions to the atmosphere by an average of 1.1 tonnes, plus a further 0.9 tonnes of CO2 stored in the timber. The thinktank Chatham House’s illegal logging portal says that in 2015 illegal logging made up 10% of total wood trade. Illegal logging and the related trade has serious implications for tackling SECTOR SNAPSHOT – TIMBER The trouble with timber Timber has the potential to make the construction industry much more sustainable; when grown and harvested sustainably it is a recyclable, carbon-neutral material. But it also has numerous challenges – and legislation – to overcome and adhere to Essential insight • Watch out for illegal logging, land clearance and deforestation in your supply chain, and the impact of these on climate change. • There are big fines for illegal logging laggards from newer tougher legislation in the EU and the US. • Consider the benefits of certification schemes such as FSC and PEFC, which are ever-more popular first steps for brands keen to clean up timber supply chains. • Engineered products such as plywood are a particular challenge for the industry because it is hard to trace the origin of some of the woods they contain. SUPPLY CHAINS IN FOCUS The construction sector accounts for 40%OFTHEWORLD’S CARBONFOOTPRINT Illegal logging makes up 10% of total wood trade INNOVATION FORUM
  2. 2. PAGE 2 supply chain and provide evidence of legality right back to the source of the timber along with proof of due diligence. Because it is not always easy to ascertain the exact source of some timber, the regulation is designed so that if illegally- produced timber is found within a company’s supply chain but it has done all the due diligence it can to discover the source, it won’t be prosecuted. By contrast, firms without evidence of due diligence can be prosecuted even if no illegal timber is found. A review of the EUTR’s first two years by the European Commission said that while in July 2014 there were 18 non-compliant member states, in June 2015 there were just four (Greece, Hungary, Romania and Spain). In the US, the relevant legislation is the Lacey Act, which dates from 1990 and was originally aimed at stopping the illegal trade in wildlife. In 2008, it was amended to make it illegal to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any plant, with some limited exceptions, taken or traded in violation of the laws of the US, a US State, or relevant foreign law. This brought forestry products firmly within the law's purview. As the Rainforest Alliance says, the new law, and the new import declaration it requires, affects manufacturers and exporters who ship a variety of products made from wood to the US, including paper, furniture, lumber, flooring, plywood and other products made out of wood. The Lacey Act is, if anything, a bit tougher than the EUTR. It has claimed a high-profile casualty in Gibson Guitars, the iconic electric guitar maker, which the Department of Justice said had imported illegally harvested wood from India and Madagascar. The case was settled in 2012 with the guitar maker agreeing to pay a SUPPLY CHAINS IN FOCUS Many supply chains end here penalty of $300,000; make a community service payment of $50,000 to the National Fish and Wildlife Foundation to be used to promote the conservation, identification and propagation of protected tree species used in the musical instrument industry and to implement a detailed compliance programme designed to strengthen its compliance controls and procedures, as well as relinquishing civil claims to wood seized by the US government, including more than $250,000 of ebony from Madagascar. Heavy fines Virginia-based hardwood flooring retailer Lumber Liquidators was sentenced in February 2016 to pay more than $13m in criminal fines, community service and forfeited assets related to its illegal importation of hardwood flooring, much of which was manufactured in China from timber that had been illegally logged in far eastern Russia, in the habitat of the last remaining Siberian tigers and Amur leopards in the world. It is a case which shows the true cost of turning a blind eye to the environmental laws that protect endangered wildlife. As one of the largest financial penalties ever imposed under the Lacey Act, this sentence highlights the significant risk of sourcing materials from questionable suppliers operating in high-risk regions of the world, adds US law firm Beveridge & Diamond. The verdict also demonstrates the importance of exercising due diligence in the global supply chain. Companies cannot ignore warning signs and blindly rely on claims from suppliers. One way of ensuring compliance is to be a member of a sustainable timber certification scheme. The two main initiatives are the Forestry Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC). FSC is seen as the strongest standard in the environmental 4 EU member states – Greece, Hungary, Romania and Spain – are non-compliant with the EUTR law INNOVATION FORUM
  3. 3. PAGE 3 SUPPLY CHAINS IN FOCUS community, with Greenpeace International saying that, while the FSC faces challenges, it contains a framework, as well as principles and criteria, that can guarantee socially and ecologically responsible practices if implemented correctly. The campaign group does not believe that other forest certification systems, such as PEFC, have the ability to ensure responsible forest management. These systems lack robust requirements to protect social and ecological values. It is easy to criticise the EUTR for being inconsistent and not sufficiently wide-ranging – it covers wooden tables, for example, but not chairs. However, since the introduction of the EUTR, there has been a significant increase in the number of certified products on the market in Europe. About 80% of the timber that passes through the hands of TTF members, for example, is certified. In part this is because TTF, which covers about 90% of the timber sold in the UK, have introduced responsible purchasing processes that it requires members to use, as well as providing them with free tools to help them do so. Fit for purpose? A growing number of products now also need a declaration of performance as part of the EU’s Construction Products Regulation, to show that they are fit for purpose in the market. One area that is a challenge for the industry is more complex products such as plywood. These have the potential to be good for the environment because they can reduce waste but equally, according to the TTF, plywood has the potential to be the “horsemeat lasagna” of the timber industry. While most timber, in the form of solid pieces of wood, is relatively easy to trace, plywood is an engineered product that uses a range of different species and while the outside will be made up of more attractive wood, it is impossible to tell what’s inside or where it has come from. A UK government report published in 2015 found that wood can be illegally logged in Africa and sent to China, which supplies 50% of the plywood used in the UK, and disappear into the system without a trace. The report said that of 16 companies asked to supply their due diligence system for the Chinese plywood that they place on the market in the EU, 14 were deemed insufficient. Another problem with plywood is the use of chemicals such as formaldehyde in the glue used to bind it together. This can be dangerous for consumers as fumes are emitted and, potentially far more seriously, it helps to contribute to unsafe conditions for workers in manufacturing facilities. This can be an issue for companies when they seek to comply with another regulation, the UK Modern Slavery Act, which calls on any company with a turnover of more than £36m to have a policy on tackling slavery in the supply chain. While this is not an issue unique to the timber sector, it is a new issue for the industry and one that it is still getting to grips with. ★ Plywood has the potential to be the ‘HORSEMEAT LASAGNA’OFTHE TIMBERINDUSTRY Plywood: useful, but hard to trace? $350,000 the amount Gibson Guitars had to pay in a settlement $13M the amount Lumber Liquidators was sentenced to pay in criminal fines Wood can be illegally logged in Africa and sent to China, which supplies 50% of the plywood used in the UK, and disappear without trace INNOVATION FORUM

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