A Birmingham court heard a UK furniture importer plead guilty to two criminal offences under the EU Timber Regulation at the end of 2019. The case concluded with a relatively low fine (under £15k) being issued but the message is still clear. The warning signs are there. EUTR regulations have been in place for six years now and regardless of what happens with Brexit, BEIS (The Department for Enterprise and Industrial Strategy and the UK’s Competent Authority) is toughening up on enforcement and compliance is more important than ever. Don’t find yourself on the wrong side of the law. Now is the time to take the EUTR’s requirements seriously and ensure you comply. Ignorance is no longer an acceptable excuse. The Competent Authorities seem to be moving beyond the earlier outreach, education and warning approach and now expect a high level of compliance.
The EUTR aims to stop illegally harvested timber reaching the EU market. In order to do this it requires Operators (those companies who first place certain timber products on the EU market) to exercise due diligence to assess the risks of illegally harvested timber entering their supply chains. Adequate due diligence includes looking at areas such as:
- chain of custody information, issues with companies in the supply chain and the potential for mixing within supply chains
- the prevalence of illegal logging in the country of harvest
- the prevalence of illegal harvesting of the specific timber species
- issues with fraud, corruption and the accessibility of official information in the source and manufacturing country, and the potential association with armed conflict, which is frequently associated with natural resources, including timber, in developing countries.
Recent prosecutions in the UK and across Europe have focused on failures of companies to establish the necessary systems to be able to tell if timber is high risk or not. The law applies to various timber and paper categories but furniture importers have been a recent target. It is recognised that furniture products made of multiple components are high risk due to the complexity of the supply chains. The latest UK prosecution involved a bed frame from Brazil and cabinet from Vietnam. While subsequent investigations have shown that the timbers used had a low risk of being illegally harvested, the company were liable under the regulation because of a failure to establish the necessary due diligence systems prior to placement on the market.
Our understanding, based on working with companies who have been investigated by BEIS, is that inadequate approaches can include:
- Stating products are simply FSC or PEFC (Forest Stewardship Council or the Programme for the Endorsement of Forest Certification) is not adequate due diligence.
- An absence of a system to conduct due diligence in accordance with the EUTR prior to the products being placed on the market for the first time. Retrospective due diligence does not comply with the regulations.
- An absence of documented evidence as to how the company concluded the products had a negligible risk of illegal logging against all the criteria in the EUTR.
- Absence of records to demonstrate the chain of custody of the supply chain for the timber products in question.
Risk assessments can be subjective but new technology is playing an increasing role in this arena to provide extra assurances. Scientific testing to authenticate species and location of harvest is more accessible to both enforcement authorities and Operators . New data collected by Forest Trends shows that 53% of EU member states are already using scientific testing in enforcement of timber trade legislation and this figure is expected to rise to 93% by 2024. Such technology showed 62% of tested products available on the US market had one or more fraudulent traceability claims. The availability of such technology should be seen as an opportunity for suppliers to scientifically confirm their products provenance.
Mitigation, whether this is scrutiny of supply chains or species testing, is the name of the game. If importers cannot mitigate the risks of illegal timber entering their supply chains, they simply should not being importing that product from that supplier. Some would argue that the onus on importers is too heavy, others that the levels of sanctions are not dissuasive enough but the direction of travel is only going one way as consumers and governments become increasingly concerned about the destruction the world’s remaining forests.