Today, exactly three months remain until businesses need to comply with the EU Timber Regulation. Many companies in the UK feel they are close to ready; however, some are still at risk of not complying, according to the findings of a new NEPCon and Timber Trade Federation (TTF) survey.
The survey in the UK and Ireland, which successfully targeted 'first placers', revealed that the majority of respondents have heard of the EU Timber Regulation and possess a good understanding of its obligations – especially TTF members and NEPCon clients. Companies that import timber from outside of the EU or place nationally grown timber onto the EU market, known as first placers, will be most affected by the new law.
“We’re pleased to see that many businesses have gone far in addressing some of their key sourcing challenges. We hope the positive findings of this survey give less prepared companies the confidence that, however daunting the task, others are making progress – and so can they”, says Ann Weddle, Acting Director of NEPCon UK.
The results provide a useful indication of the types of companies that are prepared against those that are not and flags key remaining challenges. However, given that less than 100 companies participated in the survey, the findings should not be taken as an indication of the entire industry’s preparedness in the UK and Ireland.
Smaller firms at greater risk
The survey reveals that businesses that hadn’t heard of the EUTR were all smaller firms with annual turnovers of less than £3.2 million, highlighting the challenges facing small businesses. In line with this trend, of those that had heard of the Regulation, there was a marked decrease in understanding of the obligations among small-to-medium sized businesses.
“It is not surprising to see that it is the larger, more resourced companies that have a better level of awareness of the EU Timber Regulation. We urgently call for greater efforts to be placed on raising awareness among smaller companies. Equally, these businesses need not dwell on the challenge ahead but rather bite the bullet and identify the support they need and tap into the tools and resources available to them”, says Ms Weddle.
Underpin strategies with operationally robust systems
Many respondents have taken strategic steps by developing a timber sourcing policy. The focus now for these respondents will now be on staff training, awareness raising, supply chain mapping, development of a due diligence system to strengthen the operational efficiency of that policy.
However, there were a number of respondents that were unaware of the need to establish a due diligence system – a central requirement of the EU Timber Regulation. Conducting risk assessments and establishing systematic risk mitigation procedures needed to minimise the chance of illegal timber entering the supply chain are a relatively time-consuming process and these companies are in danger of not meeting the 3 March 2013 deadline.
Build on existing systems to reduce risk
Most companies feel they are prepared for the EU Timber Regulation, or can be with a little extra work, particularly those that trade in certified or verified products. The majority already buy a good proportion of their timber products from risk-managed sources, predominantly through the two established schemes FSC and PEFC, rather than the newer legality verification schemes.
“While certification does not guarantee legality, companies that trade in certified products are reducing their risk of buying illegal timber products. We see the challenges being greater among companies that source non-certified products, particularly from areas with high levels of corruption or poorly governed forestry practices”, says Ms Weddle.
TTF members and NEPCon clients better prepared
TTF members and those using NEPCon’s forest product certification services are fairly robust in terms of awareness and due diligence.
“Timber legality assurance is a natural part of our core services”, explains Miss Weddle, “We recognise illegal logging as a serious problem that urgently needs to be addressed, and we have established a programme to support the industry in setting up and managing due diligence for legal timber sourcing”.
Companies using NEPCon’s FSC and PEFC services are already addressing key risks in their supply chains. NEPCon’s new LegalSourceTM Programme provides an array of services and tools for companies importing timber products into regulated markets and for their suppliers.
The TTF has developed the Responsible Purchasing Policy (RPP), a due diligence system that comes free with membership and is particularly benefitial to smaller companies with limited resources.
Mr Punja says, “In light of the EUTR, we introduced a compulsory due diligence for all TTF members in 2008 within our members’ Code of Conduct, and the survey shows that our members are ahead of the game in terms of the maturity of their due diligence systems. It’s just really good to see that all our hard work at the TTF is having an impact on the ground”.
Bureaucracy or opportunity?
Expectations of how the new law will impact business are marked by both optimism and scepticism. While the majority of respondents are anticipating increases in bureaucracy, few felt it will result in difficulties sourcing legal products.
Encouragingly, most are expecting improvements in risk management, and many believe it will bring reputational benefits and foresee more sales of their certified products.
“Some of the new requirements will undoubtedly be challenging for many companies especially those importing from outside the EU, however, the regulation also pushes our enterprises towards better supply chain management, which can only help organisations like ours to market the positive sustainability message of wood products”, says John White, CEO of the TTF.
Good supply chain management largely assumes more importance for companies trading in timber products – buyers need to know exactly where their products are coming from to secure reliable supplies in the future. At the same time, the regulation is part of a global trend that has already led to increased demands for legal and sustainable timber, and which is set to continue growing. The EU is not alone in its endeavours – the US already has the Lacey Act and the Australian Prohibition Bill are in place which forbids import and trade in illegal wood products.
This movement is very important as the majority of higher value markets for timber now have legislative frameworks in place to curb the demand for products that could be from illegal sources. It is hoped that this move will influence countries that are building their economies through processing and manufacturing, such as China and Vietnam to source raw material inputs that are legal at the minimum.
“It is important to remind ourselves of the purpose of the regulation. Illegal logging has negative impacts for biodiversity, climate change, forest communities’ human rights and the economic development of timber producing countries in the developing world. says Peter Feilberg, CEO of NEPCon.
"The final destination for an estimated one-fifth of global timber products, the EU has a significant influence. By following the new EU requirements, businesses in the UK and Ireland will help to secure fair competition for those timber producers and traders that show ethical behaviour and put an end to an unfair and criminal trade”, Mr Feilberg continues.
Learn more:
> Facts about the EU Timber Regulation
> How the LegalSource Programme can help your business
> About TTF's Responsible Purchasing Policy (RPP)