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The GFTN Guide to Legal and Responsible Sourcing

3.4 Focusing Policy on Legal Compliance

Policy Development In defining the scope of its sourcing policy, your organization will need to understand the regulation affecting forestry and trade of forest products in the markets where you operate and source from. Your organization should also identify other legal issues of concern for your key stakeholders. Then your organizations will need to balance the range of legal compliance issues with teh need to contain auditing costs. Note legislation affecting the legal trade of forest products is increasing globally with examples such as the amendment of the Lacey Act in the US, the European Union Timber regulation and the Australian Illegal Logging Prohibition Bill. You can find more information on legality in other sections in this guid that address this issue. 

A comprehensive approach to determining the legality of forest products could cover many issues beyond forestry. For example, the policy could explore adherence to laws relating to taxes, labour, health, corporations, transport, customs, pollution or money laundering;  ingredients besides wood (finishes, other materials, packaging) and phases of production (harvesting, hauling, milling, shipping, manufacturing, trading and end use). In addition, a full approach could address the procedures leading up to the grant of a timber permit, including adherence to planning laws, impact assessment requirements, tendering procedures, contractual "fairness" provisions and absence of any suspicion of corruption or collusion.

Your policies need to prioritize the legal compliance problems to be addressed; for example, is the focus on illegal logging or does it also include labour and pollution laws in factories further along the supply chain? The following approaches can be used to find this balance.

  • Limit the scope of enquiry to offences that relate to forest management. For example, you could focus your enquiry on legal compliance during harvesting, transport and trade in the source country and only investigate activity in intermediate countries so far as they relate to "laundering" or traceability of the origins of the timber.
  • Concentrate routine enquiries on what can be readily verified (for example, existence of a valid permit to harvest in the area where the timber was sourced), while investigating forms of illegality that are harder to pinpoint (for example, fraudulent transfer-pricing schemes) if and when a suspicion is raised.
  • Use a stepwise approach that starts with simple checklists and becomes more complex as experience and confidence are gained.

A key role of your policy on illegal logging is to establish the framework upon which a culture of legal sourcing can be built. A good policy will precisely define the issues that it seeks to address and will identify what is and what is not acceptable to your organization. The policy should clearly convey the values of your organization and show how these values will be upheld.

Although pervasive corruption is a major cause of poor forest governance, this manual focuses on illegal logging and related trade. Experience has shown that both illegal harvesting and related trade can be addressed directly through responsible sourcing, whereas pervasive corruption is a broader problem that generally requires a different set of responses. (For mechanisms to address corruption, go to Transparency International Web site at www.transparency.org.)

More information on the negative impacts of supporting the illegal trade in forest products can be found here.

Note for GFTN Participants: GFTN participant companies are required to agree a scope of their participation that at least covers their main impacts regarding sourcing of wood or fibre.


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