TIMBER TRADE ACTION PLAN 2005-2013 - … · TIMBER TRADE ACTION PLAN. INTRODUCTION. TIMBER TRADE ACTION PLAN 2005-2013 . COMBATING ILLEGAL LOGGING. ... can be issued a FLEGT licence

COMBATING ILLEGAL LOGGING

TIMBER TRADE ACTION PLAN 2005-2013

WWW.TFT-FORESTS.ORG

€

1 INTRODUCTION

2 CONFRONTING ILLEGAL LOGGING

4 TIMBER TRADE ACTION PLAN

5 TTAP OBJECTIVES

6 HOW TTAP WORKS

7 RESPONSIBLE AND LEGAL FOREST MANAGEMENT

8 TTAP RESULTS

10 SOCIAL, ECONOMIC AND ENVIRONMENTAL BENEFITS

12 CASE STUDIES

15 CHALLENGES ENCOUNTERED

16 NEXT STEPS

COMBATING ILLEGAL LOGGING CONTENTS

TIMBER TRADE ACTION PLAN INTRODUCTION

www.tft-forests.org/ttap

TIMBER TRADE ACTION PLAN 2005-2013 COMBATING ILLEGAL LOGGING


ABOUT THIS PUBLICATION

The Timber Trade Action Plan (TTAP) is a private sector initiative funded by the European Commission (EC) and co-funded by the partnering Timber Trade Federations (TTF) of the United Kingdom (UKTTF), the Netherlands (VVNH), Belgium (FBCIB) and France (LCB). Responsible supply chain management experts TFT managed and staffed TTAP from its start in 2005 to its conclusion in 2013.

TFT provided training and technical support to build capacity of European buyers and their timber suppliers in Africa, Asia and South America, promoting legality verification as a means to demonstrate responsible tropical forest management.

This report aims to inform stakeholders about TTAP, the rationale behind the project, its objectives, approach and the results it has achieved.

CONTACT:TFT, 4 Chemin des Brumes 1263 Crassier, Switzerland TEL:

+41 (0)22 367 9440EMAIL:

[email protected]

ABOUT THE PROJECT

BENEFICIARY NAME: The Forest Trust (TFT)

PROJECT PARTNERS:

Belgian, Dutch, French and UK Timber Trade Federations (TTFs):

FBCIB Fédération Belge du Commerce d'Importation de Bois / Belgium

VVNH Koninklijke Vereniging van Nederlandse Houtondernemingen / The Netherlands

LCB Le Commerce du Bois / France

UKTTF United Kingdom Timber Trade Federation / UK

PROJECT NAME:

TTAP 1: Timber Trade Action Plan for Good Governance in Tropical Forestry

DURATION:

TTAP1: March 2005 / December 2011

FOCUS COUNTRIES:

TTAP1: Cameroon, Republic of Congo, Gabon, Indonesia and Malaysia

PROJECT BUDGET: TTAP1: € 4,413,702

EU CONTRIBUTION:TTAP1: € 3,499,999 (or 79.3 % of total cost)

PROJECT NAME:

TTAP 2: Timber Trade Action Plan for Latin America and China

DURATION:

TTAP2: December 2006 / June 2013

FOCUS COUNTRIES:

TTAP2: Bolivia, Brazil, China, Guyana and Suriname

PROJECT BUDGET: TTAP2: € 4,379,780

EU CONTRIBUTION:TTAP2: € 3,389,796 (or 77.4 % of total cost)

Given Europe’s role as a major importer of tropical timber, we funded the TTAP project to work with private sector companies in key producer countries to help them move to cleaner supply chains and promote legal timber trade with Europe. MATHIEU BOSQUET, HEAD OF FORESTRY SECTOR, EUROPEAID

1

CONFRONTING ILLEGAL LOGGING

VOLUNTARY PARTNERSHIP AGREEMENTS

Voluntary Partnership Agreements (VPAs) are bilateral treaties between the EU and individual timber-producing countries that export timber products to the EU. A VPA aims to ensure the legality of the timber and timber products leaving the producer country for the EU. A VPA starts with a process of broad stakeholder consultation and agreement in the producer country on the definition of legality and the ways to verify and enforce compliance. Once the legal definition is defined, a timber legality assurance system is developed to trace timber back to origin and ensure that no unverified timber has entered the supply chain. After full implementation, all timber products complying with the legal requirements can be issued a FLEGT licence demonstrating the legality of the products to the buyer. As of June 2013, six VPA countries are developing their assurance systems, eight more are at the negotiation phase and a further eleven countries are receiving information as part of pre-negotiation.

EU TIMBER REGULATION

The EU Timber Regulation (EUTR) aims to ensure that no illegal timber or timber products are sold in the EU. It came into force on 3 March 2013 and prohibits operators in Europe from placing illegally harvested timber and products (including furniture, pulp and paper, logs and sawn wood) on the EU market. The EUTR is legally binding in all 28 EU member states and obliges operators to have systems in place to assure the timber is of legal origin. Operators distributing timber or related products in the EU market, whether harvested inside or outside the EU, are required to exercise due diligence to minimise the risk of illegality. Operators are required to undertake a risk assessment and carry out mitigation where risk is found. Products carrying a FLEGT licence (hence from VPA countries) automatically comply with the EUTR. As yet, no FLEGT-licensed timber is available for export to European countries, and until FLEGT licences are available, operators will require other evidence of compliance with national legislation to demonstrate that due diligence has been carried out.

VPA countries. Source: http://www.euflegt.efi.int/portal/home/vpa_countries/

‘Illegal logging’ is when forest products are harvested, transported, processed, and bought or sold in violation of national or international laws. Inconsistent forest policies, impractical laws and insufficient institutional capacity to enforce them mean that in some countries illegal logging practices exceed legally permitted forest activities. According to the Food and Agriculture Organisation (FAO), in 2010 the net loss of forest through illegal logging reached an annual average of approximately 5.2 million hectares.

Illegal logging contributes to deforestation.Loss of habitat threatens biodiversity and the wellbeing and livelihood of forest-dependent communities. It is estimated that this criminal trade costs governments worldwide in excess of US$10 billion a year through lost revenue. The presence of illegal timber on the market puts companies operating responsibly at a competitive disadvantage due to depressed timber prices. On a wider scale, affecting us all, deforestation is one of the largest sources of greenhouse gas emissions and contributes significantly to climate change.

To combat illegal logging and its associated trade, in 2003 the European Union published the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan: a series of measures to exclude illegal timber from markets, improve the supply of legal timber and increase demand for responsible wood products.

IT IS ESTIMATED THAT TILLEGAL LOGGING COSTS GOVERNMENTS IN EXCESS OF US$10 BILLION A YEAR THROUGH LOST REVENUE

VPA WORLD MAP

Six countries that have signed a VPA and are developing the systems needed to control, verify and license legal timber. A further seven countries are negotiating with the EU, and 12 others have also expressed an interest in entering into a VPA.

KEY TO MAP

EU Countries

Agreement concluded / system development

Agreement being negotiated


$10bn



2 3

We engaged in the TTAP project to support our suppliers in meeting the EUTR requirements. This helped provide us with assurances of legality and support these claims to our private and public sector clients.WIM HUP EXPORT MANAGER, WIJMA

OVERALL OBJECTIVES:

Conservation and sustainable management of tropical forests

Improving forest governance and providing local capacity for sustainable use of forest resources

Developing more effective co-operation with the private sector, contributing to sustainable and equitable growth

Developing means by which forest resource management is improved to alleviate rural poverty

SPECIFIC OBJECTIVES:

Developing the private sector to ensure proper management of forest resources

Capacity building to support forest certification and compliance with EU environmental regulation

Ensuring and verifying legal compliance of major supply chains of tropical timber products to the EU

Developing harmonised purchasing practices shared by European Timber Trade Federation members

Implementing sound timber tracking and chain of custody systems

Poverty reduction through supporting competitiveness and growth of forest industries in the focus regions

Ensuring compliance to workers’ rights and health and safety regulations

Exchanging best practice amongst the budget line beneficiaries and the private sector

KEY TO MAP

TTAP 1

TAAP 2

EU Partners

TTAP'S GEOGRAPHICAL REACH

THE TIMBER TRADE ACTION PLAN (TTAP) TTAP OBJECTIVES


4 5

TTAP was one of the first private sector initiatives financed by the European Commission in support of its FLEGT Action Plan to combat illegal logging.

It was conceived by The Forest Trust (TFT) and the Timber Trade Federations of the Netherlands, UK, Belgium and France in late 2003, to help their members demonstrate the legality of their products. It would also promote sustainable forest management, improve forest governance and alleviate rural poverty in supplier countries. Managed and staffed by TFT on behalf of the partner federations, TTAP’s activities focused on working with European buyers and their producers in ten timber producing and processing countries exporting to Europe: Cameroon, Republic of Congo, Gabon, Indonesia, Malaysia, Bolivia, Brazil, China, Guyana and Suriname.

To ensure TTAP benefited the European market and increased legally verified timber imports, only suppliers of European Timber Trade Federation members were eligible to participate.

Conflicts of interest mean certification service providers are excluded from offering certification-related advice. TTAP helps fill this gap and plays an important role in expanding the uptake of certification and third-party verification in the forest sector.CHRISTIAN SLOTH FOREST LEGALITY PROGRAMME MANAGER, NEPCON

The limited supply of responsible timber available means securing sufficient volumes for our processing operations is challenging. Engaging in TTAP has increased our legal supply options and provides assurances to maintain our trade with European customers.DEMORVAN TOMEDI EXECUTIVE DIRECTOR, PAMPA EXPORTAÇÕES LTDA



DIAGRAM 2: A STEPWISE APPROACH OF VOLUNTARY STANDARDS, FROM VLO AND VLC TO FSC/PEFC

ILLEGAL OR UNKNOWN

LEGAL ORIGIN (VLO)

LEGAL COMPLIANCE

(VLC)

CERT. WOOD (FSC/PEFC)

TIME TO PROGRESS

SUST

AIN

ABIL

ITY

0 YEARS

5 YEARS

While documentation provides some degree of evidence that certain aspects of legality have been met, documents alone do not guarantee that everything is in order, and they can be fraudulent. Therefore, buyers need to conduct robust due diligence. They must understand their supplier’s legal obligations in that country and know the supplier’s supply chains and the origin and related information about the raw material. Documentation supports the due diligence process but should be cross-checked with other information gathered in the field.

TTAP gives buyers engaged in the project an overall clear vision, from where the timber is sourced and its journey through the supply chain, together with the associated risks. The work with suppliers towards internationally recognised legality verification and certification standards includes environmental, social and economic indicators, and once these are met, it demonstrates that they are following their legal obligations and can provide evidence of responsible forest management.

There are a number of voluntary forest management schemes that demonstrate legality, such as Rainforest Alliance’s VLO and VLC (Verification of Legal Origin, Verification of Legal Compliance), SCS’s Legal Harvest Verification and NEPCon’s Legal Source, all of which promote a stepwise approach towards sustainability shown though FSC (Forest Stewardship Council) and PEFC (Programme for the Endorsement of Forest Certification). These standards make chain of custody systems mandatory to ensure timber is traceable from the verified forest to export and is monitored and segregated to prevent mixing with unknown and potentially illegal timber.

While verification of legality and certification is not specifically required by the EUTR, it does provide third-party evidence to buyers that the timber has been harvested legally and responsibly. This supports the buyer’s due diligence process and their company’s brand and credibility.

HOW TTAP WORKS RESPONSIBLE AND LEGAL FOREST MANAGEMENT

DIAGRAM 1: FOUR STEPS OF THE TTAP APPROACH

TIME

STAGE 1: NOMINATION

STAGE 2: GAP ASSESSMENT

STAGE 4: THIRD-PARTY

STAGE 3: ACTION PLAN


6 7

The TTAP approach of tackling illegal logging and promoting responsible forest management starts when a European buyer nominates a preferred supplier in one of the TTAP focus countries. Meeting are then held with both the buyer and supplier to map out the supply chain and the products involved, and to ensure that all participants fully understand FLEGT and the associated costs involved in achieving legality verification.

Following the meetings, a gap assessment is conducted at all links within the supply chain. The gap assessment process evaluates each specific site (forest or processing facility) against a legality checklist. This identifies areas where any gaps exist and where the supplier should improve to fully meet the requirements of a generic legality standard.

Using the findings of the gap assessment, TTAP creates an action plan for the supplier and provides the necessary training, advice and technical support needed to close out the identified gaps. It is this process that supports companies to improve their forest management practices and develop and refine their traceability systems to ensure that their product has not been mixed with any unknown sources of timber at any point in the supply chain.

Once the action plan is complete and the supplier is confident of meeting the required legality standard, the certification body of choice is contacted for third-party verification. Once successful, the supplier can then export its legally verified timber to European buyers with assurances that the products have been responsibly sourced and produced and do not contribute to the illegal timber trade.

How do you know if the timber you buy is legal or not? Laws and regulations governing forestry and its associated activities differ from country to country. The generally accepted definition of legal timber is ‘timber harvested in accordance with the applicable legislation in the country of harvest’. This definition takes into account the diversity between countries, but should include:

• showing evidence that you have the legal right to harvest your forest resource

• information that you have paid all applicable fees and taxes

• evidence of taking into account third-party rights

• compliance with all required timber harvesting regulations, and

• respecting all requirements for the trade and transport of timber.

Buyers should have background knowledge of the laws of the countries they source from and understand the risks of illegal logging in those countries. Depending on the number of countries a buyer deals with, this can be a complex exercise. To help buyers and suppliers, TTAP published legality guides for the TTAP focus countries, providing a checklist of the legal requirements for each country and clarification on the evidence needed to demonstrate timber legality.



TTAP was a marvellously conceived and executed concept enabling companies to fund and implement proper systems for the supply of legally verified wood and wood products to the UK market whilst benefitting developing countries. JOHN WHITE CHIEF EXECUTIVE, UK TIMBER TRADE FEDERATION

DLH nominated a number of our Brazilian suppliers to TTAP to help them meet our Good Supplier Programme requirements. TTAP has strengthened relationships by increasing confidence and has greatly facilitated our EUTR due diligence obligations.PETER K. KRISTENSEN VICE-PRESIDENT CSR & COMPLIANCE, DLH GROUP

TIMBER PRODUCERS > TIMBER PROCESSORS > EXPORTERS > BUYERS

VERIFICATION AUDIT

SURINAMENo. OF GAs COMPLETED

14No. OF APs IMPLEMENTED

13No. OF NODES TPV

13No. OF SCs COMPLETED

7

TTAP RESULTS

70 TTAP EXCEEDED ITS TARGET OF 70 LEGALLY VERIFIED SUPPLY CHAINS


BOLIVIANo. OF GAs COMPLETED


0No. OF NODES TPV


0

TOTALSGAP ASSESSMENTS (GA)

234ACTION PLANS (AP)

157THIRD-PARTY VERIFICATION (TPV)

111SUPPLY CHAINS (SC)

76

INDONESIANo. OF GAs COMPLETED


26No. OF NODES TPV


12

CHINANo. OF GAs COMPLETED


34No. OF NODES TPV


18

BRAZILNo. OF GAs COMPLETED


25No. OF NODES TPV


7

GABONNo. OF GAs COMPLETED


4No. OF NODES TPV


0

GUYANANo. OF GAs COMPLETED


15No. OF NODES TPV


5

CAMEROONNo. OF GAs COMPLETED


16No. OF NODES TPV


15

REP. OF CONGONo. OF GAs COMPLETED


2No. OF NODES TPV

2NO OF SC'S No. OF SCs COMPLETED

1

MALAYSIANo. OF GAs COMPLETED


22No. OF NODES TPV


11

TTAP exceeded its target of 70 legally verified supply chains. When the project came to a close, TTAP had helped 76 supply chains achieve verification, ensuring traceability from responsibly managed forests through the different processing phases to export, and in doing so reassured European buyers of the products environmental and legal credibility.

The 76 verified supply chains were split between Africa (16), Asia (41) and Latin America (19). These supply chains correspond to a total of 3.9 million hectares verified out of 7.8 million hectares assessed and have helped conserve forest areas through responsible forest management.

In addition to the 76 verified supply chains, time and resources were invested in many supply chains that did not accomplish third-party verification. A total of 234 gap assessments were completed and 157 action plans implemented. This work contributed significantly towards raising FLEGT awareness and the demands of buyers in Europe for legal products. By engaging in TTAP, many companies have improved certain aspects of their forest management practices and operations, despite not completing the action plan or passing the audit. In some cases, companies decided not to undertake an audit at the end of the process due to positive VPA developments in their country, preferring instead to wait for compliance with the national legality definition.

8 9



Through TTAP, hundreds of companies and their staff have been made aware of the issues of illegality in the forest sector and have been given the tools and skills to manage the risks.

Companies engaging in TTAP have been able to maintain access to high-value major markets by demonstrating assurances of legality. In some cases, verification has also opened up new markets and added brand credibility. In seeing these benefits, some companies have subsequently engaged support to progress towards certification.

The project has also improved conditions for forest workers, and respect and rights for local communities have grown. On top of all this, the project has helped contribute to the increasing shift in attitude towards the responsible management of tropical forests in producer and consumer countries.

Overall, TTAP has made an important contribution to the implementation of the EU’s FLEGT Action Plan, not only by helping producers and buyers meet the requirements of the EU’s Timber Regulation, but also in the VPAs, by helping to field-test legality definitions in a number of African countries, as well as supporting the negotiation process in Indonesia.

TFT’s technical expertise and financial support was instrumental in building capacity for legality verification in Latin American and Southeast Asian markets. We can already see how TTAP has provided valuable momentum in the fight against illegal logging. ROBERT H. HRUBES PH.D EXECUTIVE VICE-PRESIDENT, SCS GLOBAL SERVICES

SOCIAL, ECONOMIC AND ENVIRONMENTAL BENEFITS

www.tft-forests.org/ttapwww.tft-forests.org/ttap

10 11



TTAP has generated important social, economic and environmental benefits through its activities in the focus countries and its contribution to raising awareness of the FLEGT Action Plan in the private sector. The TTAP website published tools, reports and newsletters, available in English, Portuguese and Chinese, that highlighted these benefits and promoted the project and other FLEGT activities. TTAP also organised and participated in FLEGT-related events that shared lessons in the fight against illegal logging, often in collaboration with other projects.

Particularly successful were three International Timber Trade Federation Days, organised in 2008, 2009 and 2010, which served as important networking and knowledge-sharing events for the private sector. They provided one of the first ever opportunities for 80 representatives of 24 Timber Trade Federations from Europe, North and South America, Africa, Asia and Australia to meet. This fostered international cooperation within the timber trade and helped harmonise their awareness of illegal timber issues and policy in producer and consumer countries. This paved the way for the creation of the Global Timber Forum (GTF) in May 2013, which gives the timber industry a unified voice to promote timber and its use, as well as a channel for communicating shared challenges and solutions.

TTAP partner Timber Trade Federations have adopted responsible purchasing policies and codes of conduct as a condition of membership, supporting the trade in legal timber by monitoring the risk of illegal products entering the EU. This has helped Timber Trade Federation members prepare for the EUTR obligations and become more transparent in their operations, as seen in the TTF Responsible Purchasing Policies case study on page 14.

Voluntary legality verification and certification can help reduce poverty, increase living standards and improve safety in the companies meeting these standards. This is demonstrated in the TTAP report Poverty Alleviation - Observations and the impact of the Timber Trade Action Plan. The Alpicam case study on the following page highlights the impact TTAP's involvement has had on local poverty in Cameroon.

On certain occasions, TTAP interventions also contributed to conflict resolution. In Brazil, TTAP helped resolve conflict between forestry company Rondobel and local indigenous communities (see case study on the next page).

TTAP has also had a positive impact on the environment by contributing to the conservation and sustainable management of tropical forests. In the course of the project, a total of 3.9 million hectares achieved verification of legality and 13,307 people have been trained in aspects related to legal harvest and chain of custody. Hundreds of staff working in forests have been trained in issues such as Reduced Impact Logging (RIL) and improved plantation management.

We feel proud that Brightwood is one of the first companies to achieve Rainforest Alliance’s VLC verification. Our VLC statement offers integrity to our brand and gives buyers confidence that we are meeting EUTR requirements.ARLLEY ZHANG DIRECTOR, XUZHOU YISHUN BRIGHTWOOD CO LTD

We nominated our China supplier, Sainty Bancom, and were awarded the Timber Trade Journal’s Sustainability Award for our accomplishments in achieving VLO. We have since progressed to VLC for additional assurances in meeting the EUTR.NIGEL WILLIAMS DIRECTOR, PREMIER FOREST PRODUCTS LTD

SOCIAL IMPACTS AT SEKISHIN FARINA, INDONESIA

To achieve the VLO standard and meet the requirements of the Indonesian laws and regulations the standard is based upon, Sekishin engaged with TTAP to improve its forest management and control illegal activities. Sekishin put in place better management practices and improved local community access to common resources such as honey, herbs, rubber resin and rattan. This directly resulted in increasing the income of local communities, who to some degree depend on forests for their livelihood.

Tighter control over illegal activities meant that some members of the community no longer participated in illegal chainsaw milling activities and instead became involved in agricultural activities and harvesting non-timber forest products. As well as eliminating the risk of them being caught by authorities and having to pay out fines or bribes, and it had a positive impact on their health; forestry is one of the most dangerous professions in the world, especially when undertaken illegally, without training and protective equipment.

With Sekishin taking an increased responsibility for the environment and being more open to the concerns of communities, conflicts are now less frequent and are easier to resolve.

Since its VLO verification in 2012, Sekishin has progressed to comply with the requirements of Indonesia’s national Legality Assurance System (SVLK), negotiated though the VPA with Europe. Once the VPA is fully implemented, Sekishin will be in a position to ship FLEGT-licensed timber to Europe with 100% assurance to buyers that the products have been produced legally, thus allowing the company to continue providing its employees and local communities with income.

PRODUCERS

PRODUCER BENEFITS: RONDOBEL, BRAZIL

Family-owned forestry company Rondobel started working with TFT through the TTAP project in 2009. Rondobel manages 16,000 hectares of natural forest in the west of Pará state, as well as a sawmill in Belem. In September 2010, Rondobel proudly became the first Brazilian company to achieve the Rainforest Alliance's VLO standard. Using this as a springboard, in April 2012, after much work with local indigenous communities to help build an understanding of the company's work and aims, Rondobel was awarded FSC certification.

Rondobel's owner, Fernanda Belusso, is part of the new wave of Brazilian forestry managers who are determined to create responsible practices and positive long-term impact. She admits that achieving FSC certification once seemed a long way off: “I thought certification was just for large companies. Rondobel is a very modest player when compared to the many giants operating in the Brazilian forestry sector.”

TFT worked with Rondobel to ensure its policies, procedures and business processes were exemplary, and that all staff understood their role in the process toward certification and responsible forest management. As a basis for lasting change of practices, it was vital the company’s values were clearly defined at the outset.

Certification and Rondobel’s commitment to environmental excellence has helped open up new markets for the company. In addition to its domestic business, Rondobel is now selling to more markets in Europe, the US and Panama.

Large Brazilian companies have taken note of Rondobel and been inspired by the success of the small company and its passion to make positive change in the sector. In a state where illegal forest operations exist, the Rondobel model shows how small operators can play a big role in the implementation and promotion of best forest management practice.

ALPICAM, CAMEROON

Since 2008 the TTAP project has provided Alpicam, part of the Italian ALPI Group, with training and technical support towards achieving the Origine et Légalité du Bois (OLB) standard offered by Bureau Veritas. In June 2009, the ALPI Group received OLB verification for its forestry activities in Cameroon, comprising over 400,000 hectares of forest and processing facilities. This provides third-party assurance of the legality and traceability of its logs, lumber and processed products.

As mandated by the social and environmental requirements of the OLB standard, Alpicam improved workers’ access to drinking water and rebuilt their houses. They also set up infirmaries in forest camps and at headquarters, offering health treatment to employees and local communities.

To reduce forest management-related accidents, employees were provided with protective equipment and trained in safe harvesting techniques and accident response. All workers were registered for national social security and obtained at least the legally prescribed minimum salary.

Alpicam has also helped foster better relationships between forestry companies and local communities. The company was involved in the development of the Comités Paysans Forêts (CPF – or Forest Farmer Committees) to facilitate dialogue between parties, increase the participation of communities in resource management decisions and to help mediate potential conflicts. Alpicam also helped establish the Groupes d’Initiative Commune (Common Initiative Groups) to support local development projects and to supply local wood workers and artisans with waste wood from its sawmills. All these initiatives have helped promote Alpicam as a company that practices responsible forest management and looks after its workers and the local community.


12 13



CASE STUDIES

PROCESSORS

PAMPA

Pampa Exportações Ltd is a large timber processing company based in Belem, Para, Brazil, producing high quality decking and flooring for export. In line with the company’s strong social and environmental values and commitment to sourcing only legal and sustainable raw material, Pampa achieved VLO chain of custody in April 2011 and FSC chain of custody in August 2012.

Despite a Chatham House report indicating a 54-75% decrease in illegal logging in Brazil over the last decade, it is estimated that illegal harvesting accounts for at least 35% and up to 75% of all harvesting in the Brazilian Amazon. Securing sufficient legal supplies of raw material presents a challenge - and this was something felt by Pampa prior to taking part in TTAP. Given the risk of illegal timber entering its supply chain, and the assurances required by international buyers, Pampa enforced a robust due diligence process to ensure the legality of its raw material. However, this meant the company’s timber processing plant was operating at a fraction of its capacity, placing Pampa at a significant disadvantage to its competitors, not only through limited choice of raw material, but also because of the higher costs associated with timber of legal and traceable origin.

In 2011, TTAP began its collaboration with Pampa and the company’s raw material suppliers. This partnership increased the supply of legal raw material available to Pampa, meaning the company could keep its facility fully operational and maintain its market access with clients requiring assurances of legality. Pampa has since used its status as a responsible company to good effect by promoting its core values and its involvement and success with TTAP to buyers who are increasingly looking to manage risk.

PREMIER-SAINTY-SHENSEN SUPPLY CHAIN, CHINA

In 2012, Premier Forest Products Ltd, a member of the UK Timber Trade Federation, nominated two of its suppliers from China’s Shandong Province to participate in TTAP. Jiangsu Sainty Bancom Wood Ltd (Sainty) is a wood processing company, and Shensen manages 8,022 hectares of poplar plantations owned by over 4,000 individual farmers from four towns.

Over the course of eight months, TTAP supported Sainty and Shensen to achieve VLC certification. Given the high number of farmers Shensen manages, establishing traceability of the raw material back to origin was challenging. TTAP helped Shensen group the farmers together into more manageable units, and developed robust systems to establish traceability.

Shensen and Sainty successfully achieved VLC certification in February 2013, helping maintain their access to European markets. Legality verification has also helped the farmers receive a higher price for their raw material. The extra funds have enabled the farmers to invest in their own peeling mill to process logs into veneers, and they plan to establish an assembly mill. The project’s success is evidenced by a rise in living standards in the area, with greater nutrition and improved access to healthcare and education.

TTAP also helped Sainty to source the tropical face and back for its plywood, making sure the wood came from a verified and certified source. Plywood is comprised of many sheets of veneer pasted together to make each sheet. The central piece of Sainty’s plywood is typically made from poplar and eucalyptus grown in China. The outer layer and its face and back are from tropical countries, making the plywood more durable. By establishing verified and certified tropical sources of veneer, Sainty has helped increase the demand for responsibly produced timber in Africa and Asia, and is helping drive forward tropical forest conservation in those continents.

Halting illegal activities and improving forest management helps conserve forests and provides governments, companies, communities and individuals with the resources they depend upon.

Large Brazilian companies have taken note of Rondobel and been inspired by the success of the small company and its passion to make positive change in the sector.


BUYERS

BUYER BENEFITS: WIJMA

As a leading business in the tropical timber trade, active in forest management, processing, sales and distribution, Koninklijke Houthandel G. Wijma & Zn. BV holds core values intended to benefit both people and nature. One value is to 'treat resources in a responsible manner', and in light of the EUTR legislation, Wijma conducted its due diligence early on to determine its compliance with the regulation and ensure suppliers were operating legally and responsibly. Following internal reviews, WIJMA found it necessary and valuable to cross-check its own findings with professionals in this field. In 2011, the company approached TTAP to assess and support three suppliers towards responsible forest management, two in Guyana and one in Suriname.

WIJMA’s suppliers, Variety Woods and Greenheart Ltd, TROLUCO Holding N.V and Durable Wood Products Enterprises achieved legally verified status in November 2012 and August 2013. These companies have benefited from the process by being able to demonstrate responsible forest management to international standards, maintaining their market access, and they can promote the credibility of their brand to potential clients.

The success of the suppliers in achieving these standards helps WIJMA meet its own values and standards. This also gives its clients, which include private and governmental organisations, assurances to the quality and environmental credentials needed for their private and public procurement.

INTERNATIONAL TIMBER TRADE FEDERATION DAY

In October 2008, TTAP hosted the first International Timber Trade Federation Day (ITTFD). It was the first time 29 timber trade associations from 18 countries and 20 global forest companies met to debate illegal logging policy and how best to promote a legal and sustainable timber sector. Heralded as a unique event in encouraging collaboration between representatives of producer and consumer timber businesses, it was by popular demand hosted again in 2009 and 2010.

The success of these events led in part to the creation of the Global Timber Forum, which was introduced in October 2012 at the MTC Wood Mart, Kuala Lumpur, and officially launched in Rome, May 2013. With TTAP coming to an end in June 2013, the continuation of this event in a more formal guise under the leadership of ETTF and RB Associates is the natural opportunity needed to unite the timber industry and develop the trade of legal timber.

TTF RESPONSIBLE PURCHASING POLICIES

One aspect of TTAP was to support Timber Trade Federations’ (TTF) members to secure documentation assuring legality of supply chains. Partner federations adopted responsible purchasing policies and codes of conduct early on, and this became particularly important in light of the EUTR, which obliges importers and buyers of timber in the European Union to undertake due diligence of their products. This essentially requires that they know the supplier, the species and origin of the timber and assess the risk of illegality. Where there is a risk, measures to mitigate that risk must be carried out.

Whilst these responsible purchasing policies are now an obligation for members of some federations in Europe, it is not the case for all. The TTAP partners therefore undertook a number of workshops with the European Hardwood Federation (UCBD) to harmonise codes of conduct and purchasing policies. This initiative was boosted by the creation of the European Timber Trade Federation (ETTF) leading on this work after the merger of several other European federations.

ETTF now offers a unified voice for the sector and is providing significant benefits to other federations in Europe to meet the requirements of the EUTR. Representing many European companies, this has helped drive demand for products sourced from responsibly managed forests.

The UK TTF's annual report from 2010 shows the impact of responsible purchasing policies as a successful mechanism to reduce the risk of illegal timber entering EU. It states that during 2010 its members' purchases of certified products (where the risk of purchasing illegally sourced timber is very low) reached 89%, a favourable comparison with the 50% reported in 2007.

14 15



52 3 4

CHALLENGES ENCOUNTERED

1An initial lack of understanding on behalf of suppliers and European buyers concerning illegal timber import regulations resulted in a ‘wait and see’ attitude. Demand for TTAP could have been much greater. Now, thanks to the newly amended US Lacey Act (2008), the EU Timber Regulation (2010) and the Australian Illegal Logging Prohibition Act (2012), demand for legal timber is on the rise.

Legality standards did not exist in several TTAP focus countries. In response to TTAP’s lobbying efforts, certification bodies, such as the Rainforest Alliance, Bureau Veritas, SCS and SGS, developed the first legality (VLO and VLC) standards in China, Brazil, Guyana and Suriname. Though absolutely necessary, it slowed progress.

The global economic downturn continues to affect the timber industry. It limits the financial capacity of companies wanting to comply and improve their processes. With limited financial resources and no price premiums paid for legally verified products, companies find any investment in achieving verification hard to justify. Nevertheless, some companies realised, and others are taking notice, that legal verification is useful for maintaining or gaining market access and can improve prices, as the Pampa case study on page 13 shows.

In some countries limited law enforcement results in continued high levels of illegality or ‘false legal’ documentation (i.e. the required documents are produced but do not correspond to the reality on the ground). Producers wanting to operate legally are experiencing difficulty in procuring supplies from legal sources, and consequently their factories are turning well below their capacities. This results in financial losses and limits investment in legality or sustainability certification.

For composite products, plywood in particular, verification of legality is an enormous challenge due to the complexity of the supply chains involved. Imported components are often of unknown origin, or they may be certified against an unknown or incompatible standard. Assuring the legality of domestically produced components can be equally as complicated.

Review the results and it is easy to consider TTAP a success. It is, but there is a strong feeling within TFT that results could have been even better. Issues hindering progress and impacting upon results were:

CASE STUDIES

NEXT STEPS


CONTINUING THE FIGHT AGAINST ILLEGAL LOGGING AND THE OTHER CAUSES OF DEFORESTATION

TTAP has demonstrated that legality verification leads to better resource management, processing efficiency improvements and improved social norms throughout the supply chain. Achieving legality verification helps companies maintain market access, and in some cases increase market access. Using legality verification as a tool for business development can eventually help to offset the investment made in the process of becoming legally verified. Once legality verification is achieved and a company sees the benefits this brings, they will often progress towards sustainable certification and its benefits. To increase trade in legal timber, companies not yet operating to these standards need to be explicitly made aware of the benefits and success this responsible approach delivers.

The whole timber supply chain needs reliable, correct information communicated to it on a consistent basis. The absence of clear messaging across the industry risks confusion amongst stakeholders, and this can delay progress at all levels, from initiatives and projects right up to government policy. For instance, the lack of information about EUTR requirements resulted in mixed messages within the industry and a 'wait until the guidelines are published' attitude. In future, good communication is a must.

ACKNOWLEDMENTS TFT would like to thank the project partners, buyers and suppliers and other stakeholders for their commitment throughout the implementation of the project, and thank you to the EC for funding the project.


16


The EUTR now puts the responsibility of due diligence on the EU importer, and TTAP shows that close collaboration and trust between buyers and suppliers is imperative to demonstrate legality and that a robust supply chain risk management system is in place. Tight relationships benefit both parties in maintaining trade, and legality verification is principally down to the commitment of both parties to improving management. In these circumstances buyers are more willing to invest in their supply chains and suppliers, and this again boils down to a need for good communication between parties and a shared willingness to develop and change.

The export market often secures higher margins than the local market, and purchasing decisions in Europe can help to influence the legality of the products and how they are produced. Whilst this is having a positive impact, the local markets of producer countries often represent considerably larger volumes. Hence policies targeting local markets, such as the VPAs attempted in some countries, can have a proportionally larger impact on forest conservation and management. Attention must be focussed on China, the world’s largest importer of timber, as this can help leverage additional positive changes in forest management and conservation.

In terms of supporting Europe’s FLEGT Action Plan, by promoting responsible forest management through legality verification of supply chains from forest to buyer, TTAP has been a success. However, suppliers in some countries perceive the EUTR as another requirement from Europe that will not be effectively enforced. The final success of TTAP will depend on how effective the enforcement of the EUTR will be, as well as the continuing engagement of partner governments to fight and prosecute illegal land conversion and corruption within the forest sector. Yet there are issues other than illegal logging that lead to forest conversion and deforestation and also need tackling. A recent European Commission study

attempted to quantify the contribution of crops (such as soy and palm oil) the textile industry and meat production on forest conversion and deforestation. It is estimated that Europe has a deforestation footprint four times greater than China’s and three times that of North America. While the timber sector is often perceived in a negative light because of the visibility of illegal logging practices, its impact is small compared to these other sectors.

The lessons learned though the implementation of FLEGT measures in addressing illegal logging should be applied to these other sectors to further minimise Europe’s impact on global deforestation.

TTAP has demonstrated that while establishing legal timber supply chains takes effort, it can be done. TTAP has helped the trade’s implementation of the EUTR, and other legality initiatives will undoubtedly benefit from its groundbreaking work.ANDRE DE BOER, SECRETARY GENERAL EUROPEAN TIMBER TRADE FEDERATION

DISCLAIMER

PROJECT PARTNERS

TFT 4 Chemin des Brumes, 1263 Crassier, Switzerland +41 (0)22 367 9440 / www.tft-forests.org

UK TIMBER TRADE FEDERATION The Building Centre, 26 Store Street, London WC1E 7BT, UK +44 (0)20 3205 0067 / www.ttf.co.uk

VVNH / NETHERLANDS TIMBER TRADE ASSOCIATION PO Box 1380, 1300 BJ Almere, Netherlands +31 36 532 1020 / www.vvnh.nl

LE COMMERCE DU BOIS 6 Avenue de Saint-Mandé, 75012 Paris, France +33 1 44 75 58 58 / www.lecommercedubois.org

FEDERATION BELGE DU COMMERCE D'IMPORTATION DE BOIS Huis Van Het Hout, Arsenal Avenue des Voluntaires 2 1040 Bruxelles, Belguim +32 (0)22 1943 73 / www.houtimportbois.be

This document has been produced with the financial assistance of the European Union, and draws essentially on TTAP’s documentation. The contents of this document are the sole responsibility of TFT and can under no circumstances be regarded as reflecting the position of the European Union. TTAP is co-financed by the Department of Nature of the Dutch Ministry of Agriculture, Nature and Food Quality.

EUROPEAN TIMBER TRADE FEDERATION PO Box 1380, 1300 BJ Almere, Netherlands +31 36 532 1020 / www.ettf.info

Documents

TIMBER TRADE ACTION PLAN 2005-2013 - … · TIMBER TRADE ACTION PLAN. INTRODUCTION. TIMBER TRADE ACTION PLAN 2005-2013 . COMBATING ILLEGAL LOGGING. ... can be issued a FLEGT licence