Meeting the due diligence market legality requirements of the EU Timber regulation (EUTR) has been a challenge for timber traders EU-wide. For many, notably small to medium-sized enterprises (SMEs), it still is. But there’s help at hand in a new EU-funded SME training Project. Providing free education, tools and risk data, it will help SMEs make due diligence less a challenge, more the standard way of doing business – even a business opportunity.
New knowledge, tools and free training in 12 EU countries
The new initiative, “Increasing Awareness and Capacity to Support Effective Implementation of the EU Timber Regulation” under the joint project Supporting Legal Timber Trade is being undertaken by NEPCon and funded with the contribution of the LIFE Programme of the European Union. The goal is consistent implementation of the EUTR among the EU’s thousands of SMEs, and to help these make illegality risk assessment due diligence an integral, constructive element within their business and administrative systems.
The Project’s package of training and support will (initially) be offered in 12 EU states; Belgium, Denmark, Estonia, Germany, Latvia, Lithuania, Holland, Poland, Portugal, Rumania, Hungary and Spain. It will be free of charge and easily accessible to companies across the SME spectrum via a new online platform that collects every bit of necessary knowledge as well as user-friendly tools and guidance. 1-day training sessions in the before mentioned EU states will be available free of charge in the fall of 2017. You can already sign up now to make sure you are offered a spot first hand, when the exact dates are released.
A case study programme was open in Denmark, Poland, Germany, Belgium, the Netherlands, Spain, Portugal, Romania, Hungagry, Estonia, Lativa and Lithuania. The programme offered a full risk assessment on an agreed scope of a company's supply chain from forest legality experts - free of charge. The companies engaged in sharing their experience with the project that in return would be able to develop EUTR tools and guidance that match industry needs.
The core project goal is to tackle continuing lack of knowledge of the EUTR’s sometimes seemingly complex requirements and show companies that due diligence is at heart good business practice.
The Project will develop new country specific information to assess illegality risk of timber supply from over 35 timber exporting countries worldwide. This too will be distributed free, both during the one-day SME training in the 12 Project countries, and also via the new online platform, where all information from the initiative will be open access and publically available.
Wider due diligence benefit
The Project’s primary goal is to build due diligence awareness and capacity among SMEs, improving their knowledge and skills in assessing illegal harvesting and trade risks across the EU’s core timber and wood products supply-base worldwide.
But it will have wider benefits too. For example, Competent Authorities (CAs) and Monitoring Organizations (MOs) across the EU will also have free, open access to the Project tools and guides. This gives them a valuable new resource in support of their respective roles in policing and supporting application of due diligence and wider EUTR implementation.
The Project in detail
During its two years, the Project is set to undertake a wide and varied range of activities in support of its central goals of increasing SME’s EUTR awareness, knowledge and building their due diligence and implementation skills and expertise. And it will deliver valuable tools and resources in the process.
The vast quantity of the country-specific risk-assessments the Project develops, 40 in total, will provide an unique and user-friendly collection of risk data that, to date, has just not been available for SMEs to use. And since this database will cover the bulk of EU timber and wood products imports, it will give SMEs the tools and guidance to undertake effective due diligence in most of their supply chains.
Besides delivering the EUTR and due diligence training, tools and information, the training sessions will also foster cooperation, coordination, experience and best practice sharing between businesses. And as CAs and MOs EU-wide access the resources, this will extend across the EU timber trade.
Outreach will also be a core function of the Project to ensure the trade is alerted to its role and activities. The project anticipates to be in direct engagement with 600-800 SME Operators in the 12 EU countries. Firstly there will be an awareness raising drive for the training sessions (one of which will be run in each of the 12 target countries) and the supporting tools and data. Critically, there will be associated activities to raise awareness of the EUTR itself. For many SMEs, it remains an unknown quantity and they are unaware if they are in compliance, or not. These businesses will be key Project targets.
Clarity is key
An essential Project goal is also to cut through the complications and lack of clarity that have made the EUTR and the exercise of due diligence more of an obstacle for SMEs than it needs to be. Two years after the Regulation came into force, there is still general lack of understanding of where to obtain and how to interpret data and documentation to support due diligence processes and provide indicators of risk.
The EU Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement initiative has generated vast amounts of information and clarified legal requirements in many supplier countries. But even this information is often still not in a format, or style to make it easily comprehensible by the wide range of EU trade stakeholders, or of practical use in coming to meaningful conclusions on timber legality risks. This inevitably further impacts SMEs’ capacity to implement EUTR due diligence.
Ensuring the legality of timber sources also, of course, becomes increasingly complex the further back you go along the supply chain, as importing and exporting procedures, processing and mixing of timber products builds each step of the way.
Given the current complexity of paperwork and information provision, by the time products are imported by an EU ‘operator’, the paper trail can be virtually impossible to follow to the level required for EUTR due diligence.
So, again, good and reliable data, tools and training, with guidance on how to put it all to work, are of crucial importance for SMEs.
Risk-based supply chain solutions
Use of risk-based strategies in responsible sourcing is another core building block of this Project. Risk assessment is a concept that has developed rapidly in recent years, and it’s proving to be a highly cost-effective solution in complex supply chains.
The foundation of this approach is, of course, reliable and specific information about risks. Unfortunately, this is where the overall FLEGT process has fallen short, with inconsistent EUTR implementation as the result. Often the timber legality information is too generic. For instance, it may give a general indication of high risk for a country as a whole, when certain species or forest types within that country may, in fact, have a negligible risk level. The data, once more, is also often presented in a way that a timber trader on the other side of the world finds nearly impossible to interpret, let alone use to make sound judgements about risk. Furthermore, the information is often fragmented and hard to find. In some cases, it’s just not available.
This new Project addresses all of these gaps blocking effective EUTR implementation. Assessing and minimising supply chain risks will be absolutely core elements of the free training sessions.
Due diligence = good business sense
Ultimately this Project will help EU timber trade SMEs take a step closer to sourcing legal timber products consistently and effectively. It has the potential to make a real difference for them and the wider trade, not to mention the forest. And the benefit is not just more effective EUTR implementation, it’s also in terms of business opportunity. Proven legal and, better still, certified wood is increasingly seen to have a competitive edge in the EU market over material from unknown or legally dubious sources. And the differential between the two is growing. So, besides ensuring EUTR compliance, it’s in the commercial interest of EU SMEs to supply, and be seen and proven to supply legal timber.
Moreover, effective due diligence and supplier risk assessment practice is also increasingly accepted as a tool for improving overall supply chain management and efficiency. It can additionally promote consistent and accurate communication and even help build closer relations and understanding between buyer and supplier.
And all this is what this NEPCon Project gives the EU timber trade a unique opportunity to achieve.
Tools and guidance
Guides, tools and assessments developed by the project will be added to this list in due course.
EUTR Q&A - General questions and answers about EUTR, risk and due diligence
Case Study Programme - Pamphlet presenting the case study programme where companies can get support in meeting the EUTR requirements and set up a solid Due Diligence System.
Leaflet: The EUTR - a guide for retailers - Leaflet about what the EU Timber Regulation is and what it requires you to do? Use this leaflet to find out more, including what products you need to carry out due diligence on, and how to do the due diligence
Hand-out: The Online Platform - 2-pager hand out providing a sneak peak at the online platform that will host all the project's country risk assessments, tools and guidance (May 2017).
Press release: call for volunteers - Press release calling for companies in Denmark, Germany, Latvia and Romania to volunteer for our case study programme in return for free expert help.
Feel free to contact us if you wish to engage or learn more about this project and if you have any ideas or comments for the project.