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Glossary

Conversion -  Forests conversion involves removing natural forests to meet other land needs, such as plantations (e.g. pulp wood, oil palm and coffee among others), agriculture, pasture for cattle (e.g. around the Amazon region), settlements and mining. This process is usually irreversible.

Corruption (in the context of illegal harvesting) -  Authorization to harvest or trade logs or timber products is secured through corrupt application of laws or administrative procedures.

Credibly certified —Source category for FSC or other forest certification, with specified criteria and requirements.

Criteria

Verification requirements

Credible chain-of-custody certificationCertification of specified products as traceable back to raw material source by a third party (for example, an accredited certification body).

Credible forest certification—Certification by a third party that a forest is well managed, under a certification system requiring

Due care - US importers need to exercise “due care” when sourcing forest products to ensure that they comply with the Lacey Act. Due care is a flexible concept that has been developed over time by the U.S. legal system. Due care means “that degree of care at which a reasonably prudent person would exercise under the same or similar circumstances. As a result, it is applied differently to different categories of persons with varying degrees of knowledge and responsibility” (Senate Report 97-123). Given the lack of certainty around how the court might view due care with respect to the Lacey Act provisions, it would be prudent for companies dealing in forest and paper products to avail themselves of the wide array of tools, technologies and resources available for assessing and eliminating illegal wood from often long and complicated supply chains. Internal company policies and tracking procedures are a critical element.

Steps may also include bar-code or other tracing systems; legality verification; certification under third-party schemes; stepwise programs offered by various organizations, and other innovative public-private partnership models.

Exporters can also follow this advice to ensure that they are also following due care to ensure that forest products are legal when sourcing materials that are to be used for export to the US market.

Showing you have taken due care as an exporter involves a number of activities leading to one result: being certain that the forest products supplied were legal. Activities that can assist an exporter to demonstrate that they have taken due care include the points below. Exporters need to consider which of these activities can be of most assistance and should adapt their management to include some (or even all) of them.

Due diligence the fair, proper, and appropriate degree of care and activity, has been practiced to demonstrate that the forest products in question have been legally obtained.

Environmental status—The source category designation of the timber in a given product.  WWF GFTN recognizes the following categories:

EU Regulation on Illegal Timber - The European Commission proposed a timber due diligence regulation to minimise the risk of importing illegally harvested timber/timber products to the EU. Under the regulation, operators trading in timber inside the EU  would be required:

Timber from VPA countries will be considered legal, and traders will not have to implement specific due diligence measures. This provides an incentive for timber-producing countries to sign VPAs.

Forest participant (in a Forest & Trade Network)—A participant who is a forest owner or manager. The participant may or may not possess credibly certified forest management units (FMUs).

Genetic modification – Credible forest certification prohibits the cultivation of genetically modified trees (GMOs). Forest products manufactured with GM content are not certifiable.

Harvesting charges—The charges due to the resource owner or official body, such as a regional or national government, arising as a result of the harvesting of forest resources.

High conservation values (as defined by the Forest Stewardship Council)—Any of the following values:

Illegal harvesting - Timber cut or removed without the required license or in breach of a harvesting license or law. This includes logs that are stolen.

Illegal logging (and related trade and corruption)—Harvesting or trading of in violation of relevant national or sub-national laws, or access to forest resources or trade in forest products that is authorized through corrupt practices.

Illegal trading - Timber, or a product containing timber, bought, sold, exported, or imported and processed in breach of the laws, including laws implemented under the Convention on International Trade in Endangered Species.

In progress to certification—Source category with specified criteria and requirements denoting environmental status of source.

Criteria

The source entity:

Verification requirements

Known source —Source category with specified criteria and requirements denoting environmental status of product source.

Criteria

Verification requirements

Known licensed source—Source category with specified criteria and requirements denoting environmental status of source.

Criteria

Verification requirements

Lacey Act - On May 22, 2008, the U.S. Congress passed amended a law intended to eradicate trade in illegally sourced forest products – including timber and wood fibre based products (such as paper). This amended law is known as the Lacey Act. The Lacey Act only applies to US-based companies as it only applies within the boundaries of the United States. Whilst the Lacey Act does not apply to other countries, it is of great importance to exporters of forest products who want to trade with US companies – US-based customers are relying on their trading partners to help them show they are complying with this law. US-based forest products importers will be seeking assurances that the products they source from both the domestic market and from overseas have been harvested, possessed, transported, sold or exported without breaking any relevant underlying laws in the country where the tree was grown, even if it was processed in another country.

The laws which are regarded as relevant and which need to be complied with include those that relate to:

  1. Theft of plants (logs);
  2. Taking plants (logs) from an officially protected area, such as a park or reserve;
  3. Taking plants (logs) from other types of “officially designated areas” that are recognized by a country’s laws and regulations;
  4. Taking plants (logs) without, or contrary to, the required authorization;
  5. Failure to pay appropriate royalties, taxes or fees associated with the plant’s (log) harvest, transport or commerce; or 6. Laws governing export or trans-shipment, such as a log-export ban.

Legally harvested Timber that was harvested

Legally traded Timber, or products made from the timber, that was

Legal right to harvestAuthorization to harvest in the forest management unit

Protected area An area of forest especially dedicated to the protection and maintenance of biological diversity, and of natural and associated cultural resources, and managed through legal or other effective means.

Recycled - A forest product made from post-consumer recycled fiber (for paper) or wood-based material that is sourced from a recovery process.

Reclaimed - Wood material from municipal or industrial sources that has been previously used.

Resource owner(s)—The holder(s) of property and usufruct rights over the land and/or trees within a forest management unit, including legally recognized rights held according to customary law.

SMART targets Targets set within a company or with suppliers that are:   

Specific. Clearly relating to single issue that needs management.
Measurable.
Defined in measurable terms so that progress can be indicated.
Achievable.
The target is possible to achieve.
Realistic.
In the context the target is a realistic one.
Time bound.
The target has a deadline or series of milestones associated with it.

SourceA combination of the supplying entity and the place from which the timber in a product originates. The source comprises the location where the timber was grown and the entity that was responsible for harvesting the timber.

TimberWood, fibre, and other woody materials harvested from trees.

Trade participant (in the Global Forest & Trade Network)— A participant who is a processor, manufacturer, trader, specifier, or end user of timber or paper products.

Unknown source - Source category with specified criteria and requirements denoting environmental status of product source.

Unwanted sourceA source that falls within one or more of the following categories:

Verified legal —Source category with specified criteria and requirements denoting environmental status of product source.

Criteria

Verification requirements


6.2 Limited Knowledge of Forest Source

Known Sources

For the purpose of exercising due diligence, having knowledge of forest source is an important first objective. If the source is considered to be known, the purchaser knows where the timber was grown, and, as far as the purchaser is aware, the source is not unwanted (that is, at this stage there is no indication that the source does not comply with policy).

Table 1 outlines a hierarchy of steps that may be followed to establish whether a source can be described as known. 

A company has limited knowledge of forest source when:

Systems

No 2nd or 3rd party verification of information about source.


Defining “Illegal Logging”

WWF defines illegal logging, related trade, and corruption as occurring when timber is harvested or traded in violation of relevant national or sub-national laws or where access to forest resources or trade in forest products is authorized through corrupt practices.

This generic definition of the problem has three key elements:

1. Illegal harvesting. Timber cut or removed without the required license or in breach of a harvesting license or law. This includes logs that are stolen.

2. Illegal trading. Timber, or a product containing timber, bought, sold, exported, or imported and processed in breach of the laws, including laws implemented under the Convention on International Trade in Endangered Species.

3. Corruption. Authorization to harvest or trade logs or timber products is secured through corrupt application of laws or administrative procedures.

Below is a selection of the many definitions from other organizations.

Other definitions of illegal logging

Organization

Definition

Reference

United States Government (Lacey Act)

“It is unlawful for any person … (2) to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce .... any plant—

(i) taken, possessed, transported, or sold in violation of any law or regulation of any State, or any foreign law, that protects plants or that regulates—
(I) the theft of plants;
(II) the taking of plants from a park, forest reserve, or other officially protected area;
(III) the taking of plants from an officially designated area; or
(IV) the taking of plants without, or contrary to, required authorization;

(ii) taken, possessed, transported, or sold without the payment of appropriate royalties, taxes, or stumpage fees required for the plant by any law or regulation of any State or any foreign law; or

(iii) taken, possessed, transported, or sold in violation of any limitation under any law or regulation of any State, or under any foreign law, governing the export or transshipment of plants

Amendments to the Lacey Act from H.R.2419, Sec. 8204 (1)

European Commission

'legally harvested' means harvested in accordance with the applicable legislation in the country of harvest;

'illegally harvested' means harvested in contravention infringement of the applicable legislation in the country of harvest;

'applicable legislation'  means the legislation in force in the country of harvest, covering the following areas of law: 

  • rights to harvest timber within gazetted boundaries;
  • payments for harvest rights and timber including duties related to timber harvesting;
  • timber harvesting, including directly related environmental and forest legislation;
  • third parties’ legal rights concerning use and tenure that is affected by timber harvesting; and
  • trade and customs legislation,

…. in as far as the forest sector is concerned.

European Commission 2009  (2)

Greenpeace

Illegal logging takes place when timber is harvested, processed, transported, bought or sold in violation of national laws. Laws can be violated at many different stages of the supply chain and can include:
• Obtaining concessions illegally (for example, via corruption and bribery)
• Cutting protected tree species or extracting trees from a protected area
• Taking out more trees and more undersized and oversized trees than is permitted or trees outside an agreed area 
• Illegal processing and export
• Fraudulent declaration to customs of the amount of timber being exported
• Nonpayment or underpayment of taxes
• Use of fraudulent documents to smuggle timber internationally.

Greenpeace 2005 (3)

Malaysian Timber Council

In Peninsular Malaysia, three categories are used to classify forest offenses.
Category 1 covers offenses involving logging without license, logging outside licensed area and unauthorized construction of infrastructure and forest roads. Category 2 covers encroachment of forest reserves for agricultural activities and settlement. Category 3 covers other forest offenses that involve felling of unmarked trees, cutting trees below the cutting limit, unlicensed workers, contractors with no valid sub-license, unregistered machinery plus other breaches of rules and regulations committed within and outside the forest reserve.

Malaysian Timber Council 2004. (4)

 

Russian Supreme Court

Illegal forest felling operation (cutting) is cutting of trees, bushes and lianas without a harvesting license, order or cutting with a harvesting license, order issued with abuse of the existing cutting-practice rules, as well as cutting carried out at the wrong site or beyond a site's borders, exceeding the set quantities; cutting of wrong species or of trees, bushes and lianas that are not subject to felling ticket, order, before and after logging period fixed in felling ticket, order, logging of trees, bushes and lianas that are forbidden to log according to Resolution No. 155 of the Government of the Russian Federation June 1, 1998, or after the announcement of the decision about temporary prohibition, restriction or complete discontinuance of forest user activities or the right to use forest area. 

Resolution No.14, Russian Federation Supreme Court 1998 (The definition is related to the application of Article 260 of the Criminal Code of the Russian Federation).(5) 

World Business Council on Sustainable Development

• Sourcing of illegal wood takes place when unprocessed wood is procured in the absence of the seller’s legal right to sell or harvest.
• Illegal logging takes place when timber is harvested in violation of relevant forestry and environmental laws and regulations.
• Illegal forest products trade involves the procurement, processing, distribution and marketing of products made from wood that has been obtained by illegal sourcing or illegal harvesting and/or are not in compliance with relevant national and international trade laws.

WWF/WBCSD Joint Statement on Illegal Logging 2005. (6)

1. http://www.aphis.usda.gov/plant_health/lacey_act/downloads/background--redlinedLaceyamndmnt--forests--may08.pdf
2. Taken from: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down the obligations of operators who place timber and timber products on the market; ec.europa.eu/development/icenter/.../flegt_timber_proposal_oct08.pdf
3. Lawless: How Europe's Borders Remain Open to Trade in Illegal Timber (Greenpeace Fact File, October 2005)
http://www.greenpeace.org/raw/content/international/press/reports/lawless-illegal-timber.pdf.
4. Malaysian Timber Council www.mtc.com.my 
5. Resolution No. 14, Russian Federation Supreme Court from November 5, 1998 (The definition is related to the application of Article 260 of the Criminal Code of the Russian Federation).
6. WWF/WBCSD Joint Statement on Illegal Logging for The Forest Dialogue (March 2005)
http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=13627


14.3 Developing National Indicators, Verifiers and Guidance for the Common Legality Framework

In order to test the applicability of the Common Legality Framework in different legal settings, TRAFFIC led the development of national indicators, verifiers and guidance for a sample of countries including China, Vietnam, Malaysia, Indonesia, India, Cameroon, Russia, Central African Republic, Democratic Republic of Congo, Republic of Congo and Gabon.

This work was undertaken through a partnership with national government agencies in two countries. In China, TRAFFIC’s partner in conducting this work was the China National Forestry Economics and Development Research Centre (CNFEDRC) of the State Forestry Administration. In Vietnam, TRAFFIC’s partner was the national Forest Protection Department of the Ministry of Agriculture and Rural Development (MARD). In the other countries, the work was carried out by TRAFFIC staff and consultants.

The National Legality Frameworks were developed through a five-step process:

  1. Compiling the legal base
  2. Initial stakeholder consultation
  3. Drafting the national framework
  4. Subsequent stakeholder consultation and national framework revision
  5. Legal and audit expert review

The initial activity was the compilation of all available documents constituting the legal framework for the forestry sector in each of the countries. This was followed by individual consultations at the national level with relevant individuals in the forestry sector including representatives of the forestry administration, government, research institutes, the private sector—including current GFTN members where appropriate, NGOs and donors. The consultation was aimed at conducting a needs assessment for a legality framework, and once agreed on the need for one, identifying the most important issues requiring attention while developing the Common Legality Framework.

The preliminary draft of the Common Legality Framework for each country was developed taking into account the results of the consultative process. Drafts were presented at a series of national consultative meetings and workshops organised with support from within each of the countries. Participants were tasked with examining the preliminary draft of the Framework and proposing amendments. National workshops were held in:

Each of the workshops was attended by approximately 30 participants from various government agencies (forestry, customs, environment and finance); national and international NGOs (e.g. IUCN, CIFOR, etc.), the private sector (timber concessionaires, processors, etc.) and assessors (independent auditors of forest certification and chain of custody). Stakeholder consultations gave guidance on the adequacy of the indicators and of the level of detail that should be included in the Common Legality Framework. In addition to the national consultation workshops in Central African Republic, Democratic Republic of Congo and Republic of Congo, TRAFFIC and WWF-CARPO also reached out to key stakeholders in order to gather additional views on the comprehensiveness and accuracy of the Common Legality Framework.

In Gabon, the workshop was organised in close collaboration with the Gabonese Ministry of Forestry, the French Cooperation and the Delegation of the European Commission in Gabon. A main constraint of the activity in Africa was the lack of satisfactory stakeholder consultation despite efforts made to consult with all relevant stakeholders in each country. In particular, the industry sector in CAR, NGOs and industry in Gabon, NGOs in DRC and all stakeholders in RC. Therefore, TRAFFIC and WWF-CARPO decided to reinforce consultations with these groups in each country during the period of June to mid-July 2007.  This last consultation phase was through small meetings, bilateral consultations or submission of written comments.

In China, several consultation workshops were held. In May 2006, fourteen representatives from NGO communities, local government, forestry institute, forest industries and GFTN-China participants attended a workshop to discuss the needs assessment activities and the elements of a legal standard in China including possible difficulties of the task. Detailed discussions were subsequently held with the relevant organisations and agencies during field visits in Shanghai in August 2006. Another meeting was specifically held to discuss the Common Legality Framework at the GFTN-China annual meeting held on 9 November 2006. This second consultation included some of the existing and potential GFTN-China participants, forest industry, relevant government departments, academic institutions and national forestry commerce associations. In collaboration with the State Forestry Administration TRAFFIC organized a national workshop in April 2007 in Beijing. The workshop was designed to conclude the first round of peer review for the legality standard in China. Twenty-three participants joined this workshop, including participants from the State Forestry Administration, the China CITES Management Authority, the Beijing Forestry University, the Forestry Academy of China, the China Forestry Commerce Association, and WWF-China. After this workshop, TRAFFIC conducted ‘peer review field trip’ to several provinces in China to discuss the definition with the provincial forestry bureaus and other provincial-level stakeholders.

In Malaysia, national workshops were not held due to the existence of legality standards from the Malaysian Timber Certification Council (MTCC) which was developed through national and regional stakeholder consultations, and the on-going EU FLEGT VPA discussions which were starting to develop their own legality standard through a multi-stakeholder process as well. TRAFFIC built on the foundation set by MTCC but developed the Common Legality Framework as part of a larger harmonization process that cuts across the project countries. One-on-one consultations were held with relevant organisations and individuals in Peninsular Malaysia, Sabah and Sarawak, including with forestry departments, MTCC, Malaysian Timber Industry board, Sarawak Timber Industry Development Corporation (STIDC), industry representatives and associations, auditors, and NGOs including environmental and social organisations.

In Vietnam, the national workshop in February 2007 was hosted by TRAFFIC and the Forest Protection Department. Further meetings were held with government institutes and organisations from the Vietnam’s forestry sector including Forest Inventory and Planning Institute (FIPI); Forest Science Institute of Vietnam (FSIV); Vietnam Timber and Forest Product Association (VIFORES), Vietnam Forestry Science Technology Association (VIFA); Vietnam Forest Corporation (VINAFOR); and Hanoi Department of Agriculture and Rural Development (DARD). Based on feedback from this round of consultative meetings, another draft was formulated. Further consultations on the draft were held with NGO stakeholders and industry (GFTN-Vietnam participants and applicants), with a new revision developed. Due to the difference in each individual’s and organization’s agenda, stakeholder consultation process in Vietnam was undertaken on a one-on-one basis.

Based on the results of the national workshops and various consultations, second and third drafts of the Principles, Criteria and Indicators (PC&I) were prepared. These subsequent drafts were reviewed by key representatives from each country and also by TRAFFIC to ensure the harmonisation of the Framework at the international level, at least to the level of Principles and Criteria.

The next step in the process was to utilize legal experts in each country to review the national PC&I to ensure that regulations referred to were current and relevant. In many of the countries there were few legal experts with the requisite expertise that were sufficiently knowledgeable and multidisciplinary in forestry, trade, conservation, environment and social issues. Therefore, it took some time to find suitable experts and complete the legal review.

A final process of harmonisation and review of the Common Legality Framework was conducted to determine possible applicability in terms of auditing and practicality of use of the verifiers. This was carried out by a consultant with expertise in conducting certification and chain-of-custody audits.

The process of developing and finalising the Common Legality Framework spanned two years, reflecting the time needed to consult widely; to take note of and accommodate the various political and administrative differences in each country; and then to harmonise the various national Criteria. It was completed in early 2009.

Due to differences in laws, procedures and implementation of the regulations, the generic Criteria may not all be applicable in every country. Each country’s Criteria and Indicators, where appropriate, may omit one or more of the Criteria, in which case the numbering sequence is also reordered for that country. For example, in some countries, there is limited legislation covering conservation or environmental issues. It is also important to note that the Criteria and Indicators are dependent on the regulations, and these regulations cover a wide range of conditions, in particular exemptions or stricter measures, usually established through contracts or agreements. The guidance notes attempt to clarify this with some details, but since the range of conditions in some Principles and Criteria is so varied between countries it may be necessary to check with the relevant agencies for greater guidance.

Some of the national verifiers identified through the above process do not refer in this document to specific regulations, but were raised during stakeholder consultations and approved for inclusion to address particular aspects of the trade or social, environmental and conservation issues, for example, contractual obligations. However, these are seldom used as the basis for the setting of indicators of the relevant country.

As legality is based on the laws and regulations of a country, including relevant departmental administrative circulars and contractual obligations, indicators and verifiers should be linked to specific regulations.  This should help to make it easier to update and keep the Framework current. Guidance notes and verifiers to assist auditors and companies in assessing compliance should be provided together with relevant regulations where possible. It is important to note that the Framework is a living document and will be updated on a regular basis to account for changes to the regulatory framework in each country.


6.3 Identifying Known Sources of Forest Products

Product Traceability

"Known" Source?

Detail and Improvements

Traceable to direct supplier. Supplier is not a forest owner or manager (not an integrated company).

No

Agree on an action plan with the supplier to deliver more traceability that will identify where the wood was harvested.

Traceable to secondary processor. Processor is not a forest owner or manager (not an integrated company).

No

Agree on an action plan with the supplier to deliver more traceability that will identify where the wood was harvested. If this processor also supplies material through another direct supplier, consider a direct approach to the processor for more information.

Traceable to primary mill. Mill is not a forest owner or manager (not an integrated company).

Maybe

If the mill has complete traceability for all sources and can identify the source for given batches of material, this is acceptable. If the mill cannot offer this degree of traceability, agree on an action plan with the supplier to determine (initially) the major suppliers to the primary mill and identify what plans the mill has to improve traceability.

Traceable to an integrated forest products company (a company that is involved in forest management and forest products processing).

Maybe

If the supplier can demonstrate that it has a good degree of traceability at all levels and that it sources only from its own forestry operations, this is an acceptable level of traceability. If the integrated supplier draws from beyond its own sources, it will need to demonstrate similar traceability. If it can, this is acceptable. If it cannot demonstrate such traceability, agree on an action plan with the supplier to identify (initially) its own suppliers and what plans the mill has to improve traceability.

Traceable to the forest management unit.

Yes

Documentation and confidence in systems is high, and all materials can be traced to this forest or forests.


7.4 Source Assessed in the Context of Exports to the US Market

Exporters can greatly assist their US-based customers in demonstrating that due care has been taken to ensure no illegal timber enters the supply chain.

Showing you have taken due care as an exporter involves a number of activities leading to one result: being certain that the forest products supplied were legal. Activities that can assist an exporter to demonstrate that they have taken due care include the points below. Exporters need to consider which of these activities can be of most assistance and should adapt their management to include some (or even all) of them.

1) Develop a policy that is shared with all suppliers and customers stating that only legal forest products will be purchased.

A sourcing policy is an essential tool in defining what your company will and will not buy. A policy should be publicly available and be signed by the highest level of management within your company. A good policy will define exactly all of the issues it seeks to address and will identify what is and what is not acceptable to your company. A good policy will include a wide range of issues that your company wants to address in addition to simple legal compliance.

As an absolute minimum the policy should include reference to:
1. A statement that your company only wants to buy and sell forest products that have legal ownership and access, legally harvested, transported, traded and exported in compliance with the laws of the country where the wood was harvested, transported, traded or exported.
2. A statement that your company will understand and abide by all relevant laws within your own country that apply to the legal ownership, access and harvest, transport, trade, processing or export of forest products.

2) Train staff so they understand why the management of these issues are important to the business.

It would be a good idea to ensure that all staff that are involved in sourcing, sales or marketing of forest products understand what the legal requirements are within your country and for the countries where you might import timber.

A number of organizations are able to offer training or advice on training and these should be consulted.

3) Develop a traceability system that identifies where forest products where harvested.

All forest products purchased by your company should be traceable to the forest where they were harvested or to a primary saw mill that has a system that monitors the origins of all the logs that it purchases.

To achieve this, at the most basic level, a questionnaire or other form of tracking technology may be required. A database indicating what was purchased and which products is recorded will be useful to monitor the effectiveness of your policy and allow your company to answer enquiries from customers as to the origin of your raw materials.

A number of organizations are available to offer direct assistance or guidance in establishing a traceability system.

4) Check each order of materials (before it is delivered) to ensure it meets the minimum requirements to show legal compliance in the country where the wood was harvested.

Prior to making any purchase it is wise to check the legality of the materials. Understanding what documents should be available and obtaining these before purchase can reduce uncertainty and save time. Your company might consider changing purchase orders or purchase contracts to stress the need for legal timber products.

The tables within this document will be able to help your company for some countries. For other countries where guidance is not available as yet similar sets of documentation should be requested and verified where possible as forestry legislations of many countries usually have similar provisions. A number of organizations are available to offer direct assistance or guidance in this respect.

5) Use third parties to verify that forest products are legal (or sustainable as this usually covers legality as well).

Around 10 per cent of the forest products traded around the world are certified under a variety of certification schemes. These schemes, such as Forest Stewardship Council (FSC) and the Programme for the Endorsement of Certification Schemes (PEFC) have developed systems that certify the management of forests and certify that the wood from these forests is contained within a product - Chain of Custody (CoC) certification. All forest certification schemes when applied at the forest cover aspects of legality (such as the legal right to harvest and the legality of harvesting) and when used in conjunction with a CoC certificate can provide a high level of assurance that the product was harvested, transported, processed and exported legally.

A number of organizations are available to offer direct assistance or guidance with respect to certification of forests and CoC.

Specially designed legal verification systems exists to verify that forest products have been legally harvested, transported, processed and exported. These systems work in a similar way to forest certification and CoC but have a much narrower focus.

A number of organizations are available to offer direct assistance or guidance with respect to legal verification.

A key aspect of forest certification, CoC and legal verification is that the assessment for compliance is conducted by a third party. Third party assessments have high credibility within civil society.

6) Keep up to date with advice or initiatives that can help improve processes that are developed, such as new technology, interpretation and changes to laws and training opportunities.

Check with any trade associations or government departments that your company interacts with to ensure that your understanding of the laws and best practices is correct and up to date. Attend any training opportunities that arise and make sure that your company's understanding of legal issues both in your country and the US is current. Participate in programmes or initiatives that can assist with responsible sourcing of forest products.

A number of non-governmental organizations and trade associations have developed programmes that are designed to assist companies through a step-wise programme of improvements to their supply chain.

7) Understand what constitutes legal timber in your country and any country you import timber from.

What are the minimum legal requirements for exports?
The tables within this guide identify the key documents that should be obtained and checked to ensure a basic level of legal compliance within the country that would meet the minimum criteria to meet the expectations of an export customer needing to comply with the Lacey Act. Only what is legal within the country where the forest product is exported will meet the needs of the US-based importer.

More information can be found at these external websites:

US Customs and Border Protection
http://www.cbp.gov/xp/cgov/trade/trade_programs/entry_summary/laws/food_energy/amended_lacey_act/lacey_act.xml

Environmental Investigation Agency
http://www.eia-global.org/forests_for_the_world/Lacey_Resources.html
http://www.wri.org/fla/


13.0 Reviewing and Improving the Programme

Reviewing and Improving the Programme

The sourcing organization should develop a series of annual targets to serve as steps toward achieving its stated policy goals. The use of annual or shorter term targets can ensure that activities and progress can be defined, measured and reported as required.

The preceding sections have elaborated on a process that helps define where a sourcing organization is with respect to the policy commitments and targets that have been set. The picture will not be perfect:—not all sources will be categorized at the highest level, nor will all be certified. Stakeholders and management will be looking for the sourcing organization to show annual incremental improvements, with fewer unwanted or merely known forest products in the sourcing mix. Ultimately the goal should be to achieve full sourcing of certified forest products. It is important to prioritize planned improvements, addressing the whole spectrum of issues that are identified. Focusing solely on increasing the volume of certified material could undermine the overall effort, should the question of the legality of other sources be overlooked.


0.2 Responsible Sourcing Programme Elements

Seven Essential Elements of a Responsible Purchasing ProgrammeThe stepwise approach cannot operate in isolation and needs a supporting process that seeks continuous improvement, similar to that used by environmental management systems. The supporting process requires that a number of key elements be in place. The remainder of this guide discusses these elements in detail.

Implementation of a responsible sourcing programme requires several key elements, which form the essential building blocks:

  1. Obtaining support from key members of senior management
  2. Reviewing the organization's present situation (whether at the starting point or a stage in an existing process) and establishing a baseline
  3. Setting policies that describe the boundaries within which the organization will operate (that is, its values and aspirations)
  4. Communicating its values and objectives to key audiences
  5. Establishing traceability
  6. Assessing the environmental status of supplies - due diligence 
  7. Reviewing and improving - due diligence

These seven elements form the basis for the remainder of this document. Appendices and links provide more detail where needed. The stepwise approach is mainly contained in elements six and seven, though all elements need to be in place for the system to operate correctly.Program Elements


13.2 Setting Targets

The purchasing organization should set two types of targets: one for their supplier and the other for themselves.

Action Plans and Targets for Suppliers

Reviewing and Improving the  Programme

The action plan for an individual supplier should be based on the responses given to the questionnaire. To fully understand the issues raised by the questionnaire, the suppliers should discuss them with the purchasing organization and develop a mutually agreed-upon action plan.

There is no need for a complete overhaul of the relationship if the problems highlighted by the questionnaire relate only to a narrow area of the business. The action plan should define exactly what is required for the supplier's business to meet the needs of the purchasing organization.

A good action plan should be SMART:

 

Internal Action Plans and Targets

It is important that progress be demonstrated to internal and external audiences. Progress in two areas in particular is measurable and demonstrable, namely increases in the proportion of credibly certified forest products in the purchasing organization's portfolio of sources and decreases in the proportion of unwanted or illegally sourced forest products.

The purchasing organization's performance against its policies and programs should be reviewed periodically, and new targets should be set for the next period of activity.

A purchasing organization that is a participant in the GFTN will have an opportunity to agree on an action plan with the local GFTN manager.

In all cases, the purchasing organization should look for ways to eliminate unwanted sources and increase all other source categories. Pursuit of this policy should, step by step, enable all sources other than those that are credibly certified to be eliminated from the supply chain.

When agreeing on an action plan with the supplier, the purchasing organization should be realistic in setting targets. An action plan can be determined and agreed to only when the first period of data collection and assessment of sources is complete. This may be as late as the end of the first year of operating a responsible purchasing policy. Ultimately, a realistic plan is one that is based firmly on the aspirations of the organization's own policies and on the informed assessment of the status of the supply chain.

The overall intentions of the internal targets can perhaps be visualized as in the diagram. This example is for a period of seven years and is for illustrative purposes only.


Improving the Quality of Data from Suppliers

Below is a list of common issues that arise when suppliers are asked questions regarding their sourcing of forest products. The list is not exhaustive but gives remedies for the major issues.

Information from the supplier is missing
Major gaps in data make it difficult to make any form of assessment. Talk to the supplier and find out why it cannot or did not provide the data requested. If the supplier does not have the technical expertise, ask that it request that its own suppliers furnish the missing data, and ask that it collate these data for you. Agree on a date by which the data will be provided.

The supplier misunderstood the question
Make contact with the supplier and explain why you are asking the question and what sort of answer you require.

Supplier refuses to complete the questionnaire
The supplier may refuse to complete questionnaires or provide data. Lack of resources is a common excuse, as is “company policy.” Explain to the supplier that your requests are valid and that they are routinely made of all your suppliers. Small suppliers may have genuine concerns about committing time and resources to providing data; in such circumstances agree that the data can be provided in small segments over an agreed-to period of time.

Suppliers that continue to avoid supplying data should be given an ultimatum, and after this point they should removed from the chain of supply. However, this is a last resort, and the intervention of senior management on both sides may be useful to maintain a dialogue and avoid this.

Supplier expresses concerns about confidentiality
In some industries and in some countries it is common to encounter concerns over the confidentiality of supply chain data. This can be overcome in a number of ways; for example, suppliers can be given verbal assurance that the data are used for environmental purposes and will not be used in a commercial context, or they could be given a signed confidentiality agreement. The provision of data may have to be made in a manner that furnishes the required information without revealing the names of commercial intermediaries or processors. Full disclosure is preferred, however, and may come in time as part of an action plan.

Supplier “does not feel responsible”
Some suppliers do not feel obliged to respond to requests for supply chain data. Arguments can vary from a position of “being too small to have any effect” to “it is none of your business.”
Suppliers in this situation should be given an opportunity to reflect on their position. Experience has shown that companies with little regard for their customers’ expectations and requirements usually fail. If a supplier cannot change its opinions and recognize your point of view it should have no place in your supply chain.

Supplier cannot prove high-risk sources are licensed
A range of techniques can be used to assess the legality of forest products, and a number of documentary proofs are mentioned within this text. Depending on your supplier’s place within the supply chain, obtaining such proofs may prove difficult. Those supply chain elements farthest removed from the forests or primary processors will experience the greatest difficulty in obtaining the required documentation. Options to address this difficulty include

Supplier cannot prove that sources are not HCVFs
HCVFs often are difficult to assess, but there are organizations that monitor the existence and exploitation of HCVFs and the organizations involved. Both your own purchasing organization and the supplier involved can draw on these sources to rudimentarily assess the sources identified. Information regarding a definition of HCVFs and sources of information on their role in trade can be found in Appendix 1 and elsewhere in this document.

Many areas lack HCVF identification processes, which by definition involve participation of multiple stakeholders. Even if the HCVFs in a particular area have not been identified, the supplier can contribute constructively to an HCVF process; larger suppliers can even initiate and help fund such processes. As part of the action plan, suppliers should state what contribution they are making to further the HCVF identification and management process in the regions where they are sourcing. When neither the supplier nor the purchasing organization can identify a source as HCVF or non-HCVF, you will have to take a judgment based on the best information available. WWF and other stakeholders should be contacted for the latest information available on particular forests.

A third party has indicated that a supplier may be using timber from conversion land
Request information from the supplier, such as a summary of the management plan for the forest, that indicates the land use and prescribed management practices. If the land is designated for conversion to agriculture or faces a similar threat, investigate further to ensure that the clearance is appropriate (see here). If the supplier is unable to provide suitable assurance, agree on an action plan to remedy or change the source.


11.0 Environmental Status of Supplies - Recycled Sources

Credibly Certified Source

The raw material used should be designated recycled if it is either a forest product made from post-consumer recycled fibre (for paper) or wood-based material that is sourced from a recovery process. The definition of recycled varies in different countries and markets. To ensure that the policy and definition used are robust, a sourcing organization should check with its stakeholder groups. In most countries the term recycled infers that the wood or fibre has been used previously by an end consumer (this is also termed "post-consumer" recycling).

It should be noted that not every sourcing organization will want to include recycled wood and fibre within its sourcing policy. For many sourcing organizations, however, and particularly those that have identified recycling as a key issue among their stakeholders, there is much value to be gained through the use of recycled materials. A number of organizations have developed systems to certify recycled materials and have developed certification standards, including the FSC. More information on standards and definitions of recycled materials is available at www.fsc.org.

More information regarding recycled paper and WWF’s support can be found here.

What Does Recycled Source Mean?

Criteria

 

Requirements


1.0 Senior Management Support

Senior Management SupportTurning policy and values into a programme that promotes the legal and responsible sourcing of forest products inevitably requires management support. Any activity that is seen as not being central to operations stands little chance of succeeding. Like all environmental and ethical programmes, a programme of responsible sourcing will succeed only when it is supported at the highest levels of management.

For smaller sourcing organizations, a programme of legal and responsible sourcing will require the support of a partner or owner to ensure that the necessary resources are made available and to ensure that conflicts over policy enforcement are resolved.

In larger sourcing organizations, a member of the board of directors or vice president should be made accountable for the programme. In all cases, the support of the head of the buying or trading function should be sought.

Key Points - Senior Management Support

Management Roles

The member of senior management should support the programme and its policies at the highest level of management in the sourcing organisation and resolve any major conflicts that may arise relating to the work. A member of middle management should manage the relationship with stakeholders, set and agree to targets, develop policies and negotiate with key internal stakeholders. A programme manager should manage relationships with buyers and traders, manage relationships with suppliers and develop tools to assess the environmental status of forest products in the supply chain. Organizstions that have successfully embedded such policies have broadened management responsibilities for implementation as widely as possible. Ensuing that all key roles are involved and in turn understand their responsibilities is a key to success. 

Note for GFTN Participants:
GFTN participant companies are required to nominate both senior managers and day-to-day contacts.


8.2 Controlled Wood Standards

Environmental Status of SuppliesThere is a large overlap between the policy elements and the necessary compliance checks as seen under the sections Source Assessed and Source Verified and the Forest Stewardship Council “Standard for Company Evaluation of FSC Controlled Wood - FSC-STD-40-005 (V2-1) EN”. Organizations that want to explore compliance with this standard in order to achieve chain-of-custody certification to FSC standards should consult the FSC Controlled Wood Standard and related standards (www.fsc.org/cw.htm). Subject to confirmation from an accredited certifier, Controlled Wood Standard has a strong likelihood of meeting sources verified (as defined by GFTN). The following is adapted from the FSC standard.

What is Controlled Wood?
The primary objective of FSC Controlled Wood is to avoid mixing wood from ”unwanted” sources with FSC-certified material during the production of FSC Mixed products. FSC Controlled Wood is not the same as FSC-certified wood which has met all the requirements of the FSC Principles and Criteria.

FSC Chain-of-Custody certified companies who are mixing FSC-certified and non-FSC-certified wood in their FSC product groups must demonstrate that the non-FSC-certified wood has been controlled to avoid sources from the five categories listed below:

FSC Controlled Wood applies to wood based products and also to Non Timber Forest Products (NTFP’s).

The FSC standard for company evaluation of FSC Controlled Wood (FSC-STD-40-005) enables forest product companies to:

Steps for Controlling Wood Sources

The FSC Standard suggests there are three ways an FSC Chain-of-Custody company can control its non-FSC-certified wood sources:

  1. Purchase wood from forest enterprises that have been verified by an FSC accredited Certification Body to meet the requirements of FSC-STD-30-010 FSC Controlled Wood Standard for forest management enterprises;
  2. Purchase FSC Controlled Wood from suppliers holding a valid FSC Chain of Custody certificate which includes an FSC Controlled Wood registration code; and
  3. Internally verify its wood sources according to the requirements of FSC-STD-40-005 Company evaluation of FSC Controlled Wood.

FSC will phase-out the company-developed Risk Assessments to be replaced by FSC-approved National Risk Assessments for making risk designations. The original phase-out date of company-developed Risk Assessments was 31 December 2012. On 24 September 2012, the FSC Board of Directors approved the request of the chamber-balanced Technical Committee to extend the cut-off date for company Risk Assessments until 31 December 2014. In the meantime, where the company continues to internally verify its wood sources, the company needs to do the following:

For all three of these cases, the company needs to have written systems and procedures in place for controlling wood. The certification body and the company will then receive an exclusive FSC Controlled Wood registration code. This is only an option for companies who can trace wood back to its origins.

 

How the company follows up this evaluation.
The company will need to differentiate between high-risk and low-risk sources, where low-risk sources can be dealt with through a relatively simple approach, while high-risk sources are subjected to the most rigorous scrutiny.

Companies need to do the following:


8.1 Certified Timber

FSC Certified Timber - The Least-Risk Option

The Least-Risk Option

The simplest way to answer the two questions is to buy timber that has been independently certified as coming from well-managed forests. Practically all forest certification standards require independent verifiers to confirm that the forest ownership, access and management is legal. Auditors will normally not carry out a “legality audit” as these are very specific assessments and can be complex and costly. During certification assessments the auditors will be making sure there is no evidence of significant breaches of the law. Chain-of-custody certificates answer the question, “How did it get here?” If purchasers can buy certified timber, the risk of trading in illegal timber will be managed and greatly reduced. The table below summarizes the various schemes’ ability to verify legality.

Certification Schemes as a Form of Verification of Legal Compliance

Certification Scheme

Checks Legal Right to Harvest and Significant Aspects of Legal Compliance

Achieves Traceability Through a Chain-of-Custody System

Requires Exclusion of Uncertified Material (From Potentially Illegal or Unwanted Sources) 

System for Controlling Uncertified Material (When Percentage Based Claims Are Used)

Value as a Form of Evidence of Legal Compliance

Forest Stewardship Council (FSC)

Yes

Yes 

Yes

Yes—Controlled Wood Standard

High – No Extra Legality Related Checks Required.

Cerflor (Brazil) 

Yes

Yes

No

No

High For 100% Certified—No Extra Legality-Related Checks Required.

Certfor (Chile) 

Yes

No

Yes

No

Verification Needed for Non-Certified Percentage

Lembaga Ecolabel Indonesia (LEI) 

Yes

No

No

No

Chain–of-Custody  System Required

PEFC* - Programme for the Endorsement of Forest Certification Schemes

 

Yes

Yes

Varies

No

High for 100% Certified—No Extra Legality-Related Checks Required.

Verification Needed for Non-Certified Percentage

Sources: Compiled from UK Central Point of Expertise on Timber Procurement's (CPET) website; Forest Certification Resource Centre—Certification Comparison Matrix (Link no longer available); Reports from the ProForest Field Test of the Questionnaire to Assess the Comprehensiveness of Certification Systems/Schemes.

For other certification information you may go directly to the certification programme’s own websites:

* Note: Countries using this scheme with national endorsement: Finland, Norway, Sweden, Germany, Austria, France, Latvia, Czech, Switzerland, Belgium, UK, Spain, Denmark, Australia, Italy, Chile, Portugal, Canada, Luxemburg, Slovakia, US, Slovenia, Estonia & Poland

Note: Forest certification schemes and associated chain-of-custody systems constantly evolve in terms of their requirements. This table is believed to be correct at the time of publication. Please check with each certification system for new developments to ensure ongoing accuracy.

Note: No system can give 100 per cent guarantee as proof of legality on its own. All certification systems are implemented by people who on occasion make mistakes or who occasionally seek to mislead. Good certification systems find and fix these errors. Always check the certificate for scope and for validity. Do not assume that because a company has a Chain of Custody certificate that material purchased from this company is automatically certified.

Percentage Claims
All forest management certification schemes examined for preparation of this manual require compliance with relevant forest legislation. Some also provide a relatively high degree of assurance that the material covered by their chain-of-custody system is legal. The situation is made more complex, however, by “percentage claims”.

Percentage claims are permitted when it is accepted that it is impractical to demand that 100 per cent of a product be certified. This is commonly the case for products in which raw wood materials from many forest sources are mixed during manufacturing (for example, paper or plywood). In such cases, the authorities responsible for the governance of the various certification standards acknowledge that some mixing with non-certified material is inevitable. Percentages are normally set, with some material coming from certified sources and the remainder coming from non-audited sources. Credit based systems do not use percentages but, when operated correctly, should ensure that the volume claimed as credit is in no way associated with material that is illegal.

Though many of the certification programmes specify that illegal timber must be excluded from the non-certified percentage. This is verified through auditing against their Controlled Wood Standard. The FSC Controlled Wood Standard seeks to provide a framework by which non-FSC-certified timber (which will be mixed with FSC-certified timber when making percentage-based claims) can be assessed for legality (amongst other criteria). Several certifying bodies (organizations that certify forest management against the standards listed in the table above) have created verification programmes to assess legality alone (i.e. excluding the non-legal aspects of the applicable standard).


15.0 Supporting Information

 

Glossary

Questionnaires


14.5 Guides to Legal Documentation

The following documents provide an overview to the typical areas that need to be covered when assessing the legality of forest products in a given country. In the absence of guidance for a specific country, the general guidance should be observed.

Please Note: These documents are for educational and informational purposes only and
are not intended and should not be construed as legal advice. Persons seeking legal advice
on compliance with any law, regulation or requirement should consult with a qualified
legal professional.


14.0 Common Framework for Assessing Legality for Forestry Operations, Timber Processing and Trade

The unsustainable and often illegal logging of timber represents a major threat to tropical forest ecosystems and associated biodiversity. Illegal logging also threatens the livelihoods of local communities and undermines the efforts of both private and public sector organisations to develop sustainable approaches to forest management. At the same time, there is increasing demand among buyers of timber and other forest products that are verified as having been procured legally and certified as sustainably produced.

An important element of this work is helping governments and businesses to be clear on legality and associated sustainability requirements in line with meeting these objectives. Among the activities being undertaken in association with the GFTN, therefore, is the elaboration of a common framework for addressing legality in key trading countries, particularly in developing countries with high biodiversity forests where illegal logging and trade are known to be a significant concern. GFTN/TRAFFIC's Common Legality Framework is comprised of several broad principles of legality, each supported by several criteria and indicators linking the principle to existing legislation.

Development of the Framework was started in June 2006. The preceding Indonesian legality standard, developed by The Nature Conservancy (TNC) in 2004 with funding from DFID UK, the result of two years of extensive and wide-ranging stakeholder consultation, was considered a solid starting point from which to tailor appropriate frameworks in other countries.

The following sections outline the process used in the development of the Framework and provides a set of national indicators, verifiers and guidance for a number countries. The Framework is a helpful tool for companies who wish to perform their own checks of suppliers, brief a third-party verifier or to meet customer requirements as well as for stakeholders involved in national legality definition processes. The Common Framework will also allow companies to understand and view at a glance the relevant legislations as captured in each of the Principles across all their country sources and buyers where national legality compilations has been completed for the Common Framework. Where no national legislative compilation using the Common Framework has been completed, the Framework should still allow companies to ask similar questions of their supply chain to help in legal compliance.

Funding for the elaboration of the Common Legality Framework for timber trading countries in Asia and Africa was provided to WWF by the European Commission Programme on Environment in Developing Countries and Programme on Tropical Forests and other Forests in Developing Countries, as part of a wider programme of work on certification and verification of forest products. TRAFFIC, a strategic alliance of WWF and IUCN, led the development of the Common Framework, working in collaboration with local stakeholders in each country.


Human Rights Violations

Internal and external stakeholder concerns may identify specific issues, countries, or companies that are extremely controversial or out of step with generally accepted practices. Sourcing forest products from such countries or companies does not so much raise questions of forest management practices; rather, it introduces the moral dilemma concerning support for regimes and practices that have a wider impact on civil society or human rights. In extreme cases, the United Nations will call for trade embargoes on such countries, as will individual national governments.

Individual responsible purchasing organizations will need to be aware of such issues and should be ready to adjust their purchasing policy accordingly.

Sources Linked to Human Rights Violations—Relevance for Responsible Purchasers

Examples of issues identified by the UN organizations that should be considered in a responsible purchasing policy include
- the systematic violation of human rights, including civil, political, economic, social, and cultural rights;
- extrajudicial killing, rape, and other forms of sexual violence carried out by members of the armed forces;
- torture;
- political arrests and detentions, including those of prisoners whose sentences have expired;
- forced relocation, the destruction of livelihoods, and forced labor;
- denial of the freedoms of assembly, association, expression, and movement;
- discrimination on the basis of religious or ethnic background;
- wide disrespect for the rule of law and lack of independence of the judiciary;
- unsatisfactory conditions of detention and systematic use of child soldiers; and
- violations of the right to an adequate standard of living, in particular to food, medical care, and education.

This set of indicators can be used to identify specific regimes, countries, or companies which, if sourced from, would directly undermine the overall effort to source responsibly. Furthermore, sourcing from such entities or places may undermine the wider integrity of the organisation.

It is arguable that it is possible to source forest products responsibly from such places, but this would require that the purchasing organisation identify and prove the benefits of such trade to the people of the country involved, while at the same time proving that the trade does not directly support the regime under scrutiny. This may not be possible in practice. It is extremely important that a purchaser that would choose to source from controversial regimes or countries first consult its stakeholders to ensure that such a policy has the required degree of integrity and support. If this approach is adopted, it is extremely important that consulted stakeholders’ viewpoints be taken into account and acted upon.

Particular attention was drawn to Burma/Myanmar, where forest products were directly associated with many of the issues identified above.

Guidance note on sourcing forest products from Myanmar (Burma)

RECENT POLITICAL AND ECONOMIC CHANGES

Since holding its first elections for 20 years in 2010, Myanmar has moved from a military dictatorship to a democratic system and launched major economic reforms. Under the government of President Thein Sein, political prisoners have been freed, media censorship lifted, and civil freedoms reinstat¬ed. A raft of liberalising measures has included a managed currency float, greater budget transpar¬ency, a newly autonomous central bank, and the passing of new investment, agricultural and land laws. Despite facing some serious threats, notably ethnic conflicts in Kachin and Rakhine states, Myanmar’s reforms have won strong international support. The EU and US have lifted most of their sanctions, and Myanmar’s creditors have cancelled the bulk of its $11.3 billion foreign debt. A surge in overseas aid and investment has pushed GDP growth to 6.3% in 2012 and a forecast 6.5% in 2013.

STATUS OF INTERNATIONAL SANCTIONS
Most economic sanctions against Myanmar have now been lifted. Those that remain target arms exports, other forms of military assistance, and transactions with certain individuals and entities.
•    European Union: In April 2013, after a one-year suspension, the EU lifted all sanctions against Myanmar except for embargoes on arms and related materials. The EU has also reinstated My-anmar’s access to the Generalised Scheme of Preferences (GSP).
•    United States: In August 2013, President Barack Obama issued an executive order rescinding a broad ban on imports from Myanmar. Restrictions on imports of certain products (notably jadeite and rubies) remain in place, as do an arms embargo and sanctions against certain individuals.
•    Others: Australia lifted all remaining travel and financial sanctions against Myanmar in 2012. Only an arms embargo remains in place. Canada suspended most of its economic sanctions in 2012, except for an arms embargo and financial sanctions against certain individuals and entities.

TIMBER PRODUCTION AND TRADE
Myanmar remains the only country in the world producing high-quality teak from natural forests. Over the past four years, however, harvest quotas for teak and other hardwoods have been scaled back in response to rapid forest decline. In 2012, the government announced a ban on log exports effective in April 2014, along with plans to increase support for domestic processing, draft a new forestry law, and strengthen law enforcement. The lifting of sanctions has reawakened interest in international timber markets and their requirements. A new and expanded committee has been set up to finalise a national forest certification scheme, and discussions are being held with the EU about possible FLEGT measures such as a Voluntary Partnership Agreement (VPA).

These moves, although promising, will take time and political will to succeed. The UN Office on Drugs and Crime estimates that 85% of Myanmar’s timber exports are illegal. Logs from northern Myanmar continue to be trafficked overland to China in violation of a 2006 bilateral accord. Logs exported from Yangon port under the authority of the state-run Myanmar Timber Enterprise (MTE) – technically the only legal route – mostly come from natural production and conversion forests where controls are weak, allowing illegal timber to be mixed into supply chains. Systems exist to track timber from the forest of origin to the point of export, but they are complex and only patchily implemented. Recent assessments point to a lack of data on forest resources and production, limited management capaci¬ties, and fragmented and politicised decision making, as the main hurdles to ensuring legality.

India is currently the main buyer of Myanmar teak and other hardwoods. Other importing countries include, in descending order of importance, China, Thailand, Bangladesh, Vietnam, Taiwan, Malaysia and Singapore. There is evidence that teak from Myanmar is re-labelled in some regional importing countries as coming from domestic sources, allowing for processing and onward export without revealing its true origin. It is possible, though unknown, that this practice has declined now that sanctions have been lifted.

RECOMMENDATIONS
The lifting of economic sanctions means there is in principle no longer any legal barrier to trading in timber from Myanmar. However, some countries still prohibit dealing with certain Myanmar individuals and entities, some of whom may be involved in the timber trade. Buyers should contact their relevant government agency to check who is on the sanctions list before making any transaction. This advice applies to US buyers in particular, as the Myanmar Timber Enterprise is on the US government’s Specially Designated Nationals (SDN) list (see: http://sdnsearch.ofac.treas.gov/Details.aspx?id=2994)

Myanmar’s new reforms promise to put its forestry sector on a more sustainable footing, but will take time to work. Evidence suggests that most of the timber Myanmar produces is illegally harvested or traded, or comes from natural forests being managed or converted without regard for broader conservation values. At this time, therefore, timber from Myanmar should be considered unwanted material unless stringent checks are made to ensure it has been legally harvested, traded, exported and imported; and that it is not the result of conversion, especially of high conservation value forests. Buyers are also advised to be vigilant when considering high-quality teak at competitive prices originating from countries other than Myanmar.

GFTN will continue to monitor the situation in Myanmar with a view to updating this guidance within one year.

BIBLIOGRAPHY
Australian Government (2013) Myanmar country brief. Department of Foreign Affairs and Trade. (link)
Canby, K. (2013) International Markets for Verified Legal Wood Products. Presentation at Workshop on the EC FLEGT Action Plan: Challenges and Opportunities for the Forest Sector in Myanmar, 16–18 July 2013, Nay Pyi Taw, Myanmar. (link)
Canby, K. & Woods, K. (2012) Myanmar: Same Same, Burn-Out or Great Opportunity? Presentation at 19th Illegal Logging Update and Stakeholder Consultation, 9–10 February 2012, London, UK. (link)
Cho, B. (2013) Current status quo and issues of formulation of TLAS in Myanmar. Presentation at 3rd Sub-Regional Training Workshop on Timber Legality Assurance System (TLAS), 22–24 April 2013, Kuala Lumpur, Malaysia. (link)
Council of the European Union (2012) Burma/Myanmar: EU sanctions suspended. Press Release, 14 May 2012. (link)
Council of the European Union (2013) Council conclusions on Burma/Myanmar. Press Release, 22 April 2013. (link)
EIA (2012) Appetite for Destruction: China’s Trade in Illegal Timber. Environmental Investigation Agency (EIA), London. (link)
Eleven Myanmar (2013) More illegally logged timbers from Myanmar trafficked to China. Eleven Myanmar, 31 March 2013. (link)
ETTF (2012) Seeds sown for Myanmar-EU timber co-operation. European Timber Trade Federation. (link)
European Commission (2013) EU re-opens its market to Myanmar/Burma. Press release, 18 July 2013. (link)
Government of Canada (2013) Canada-Burma relations. (link)
IMF (2013) Myanmar Takes Wide-Ranging Steps Toward Economic Reform. IMF Survey, 28 February 2013. (link)
IMF (2013) World Economic Outlook Database, April 2013 Edition. (link)
Ingles, A., Hurd, J. & Wardojo, W. (2013) Exporting legal timber products from the Asia Pacific region – it can be done. The Jakarta Post, 28 June 2013. (link)
ITTO (2013) Report from Myanmar. Tropical Timber Market Report 17 (14): 7, 16–31 July 2013. (link)
Kollert, W. & Cherubini, L. (2012) Teak resources and market assessment 2010. FAO Planted Forests and Trees Working Paper FP/47/E, FAO, Rome. (link)
Kurlantzick, J. (2013) Myanmar's Alarming Civil Unrest. Council on Foreign Relations, 9 April 2013. (link)
Kurlantzick, J. (2013) Too fast, too soon: Why Obama's embrace of Myanmar is putting the cart before the horse. Foreign Policy, 21 May 2013. (link)
Kurlantzick, J. (2013) Myanmar’s Religious and Ethnic Tensions Begin to Spread Across the Region. Asia Unbound, Council on Foreign Relations, 14 June 2013. (link)
Lawson, S. & MacFaul, L. (2010) Illegal Logging and Related Trade: Indicators of the Global Response. Chatham House, London. (link)
Myanmar Times (2013) Myanmar to enshrine central bank independence. Myanmar Times, 11 July 2013. (link)
Robinson, G. (2013) Myanmar signs deal with foreign creditors. Financial Times, 28 January 2013. (link).
Su Hlaing Tun (2012) Myanmar government plans log export ban, targets value-added growth. Myanmar Times, 5 November 2012. (link)
Turnell, S. (2013) Economic Reform in Myanmar: The Long Road Ahead. Asia Society, 6 February 2013. (link)
Turnell, S. (2013) Myanmar has made a good start to economic reform. East Asia Forum, 27 March 2013. (link)
U Shwe Kyaw (2013) Status of Myanmar's Efforts at Improving Timber Traceability. Presentation at Workshop on the EC FLEGT Action Plan: Challenges and Opportunities for the Forest Sector in Myanmar, 16–18 July 2013, Nay Pyi Taw, Myanmar. (link)
UNODC (2013) Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment. United Nations Office on Drugs and Crime (UNODC), Vienna. (link)
US Department of the Treasury (2013) Issuance of New Burma Executive Order. Press release, 7 August 2013. (link)
Win Myint (2011) An overview of teak resources and plantations in Myanmar. Presentation at Conferencia Mundial de Teca, 31 October – 2 November 2011, San José, Costa Rica. (link)
Woods, K. (2013) Political Economy of Timber Trade Flows in Burma / Myanmar. Presentation at 22nd Illegal Logging Update and Stakeholder Consultation, 8–9 July 2013, London, UK. (link)
Woods, K. & Canby, K. (2011) Baseline Study 4, Myanmar: Overview of Forest Law Enforcement, Governance and Trade. Forest Trends for FLEGT Asia Regional Programme, Kuala Lumpur. (link)


9.0 Environmental Status of Supplies - Source Verified

Source in Progress to Certification

Sources could be legal but still involved in unwanted activities which are in conflict with the corporate responsible sourcing policy. Source verified means that the forest source has been 3rd party verified for basic social and environmental criteria-

Criteria

Requirements


4.2 Communicating Progress

Communicating Progress Towards Sourcing ResponsiblyHaving developed policies and associated activities to deliver them, the organization will then communicate its progress. The mechanisms for communicating progress are the same as for communicating policy.

It is strongly recommended that public reporting of progress against targets be conducted on an annual basis and be subject to some form of external verification. The report should indicate progress against targets, the general status of the supply base (using the stepwise approach advocated in this guide) and new targets for the next reporting period or longer if required.

Clear, accurate and truthful communication of policy and activity can be a valuable tool. The integrity of the organization and its supply chain are at risk if the nature, role, scope and achievement of the policy are poorly communicated.

Note for GFTN Participants: GFTN participant companies are required to report their performance against targets on a regular basis to GFTN. Public reporting of performance is encouraged.


8.5 Strategies for Verifying Legality

Verifying Legality

Low-Risk Suppliers

Low-risk suppliers are those that are unlikely to supply illegal timber. The level of objective evidence supplied for the risk rating process should already have been significant. Little more needs to be requested of these suppliers other than to ask them to complete a new risk-rating questionnaire each year or when you plan to purchase a new product category from them. However, you should ask them to inform you if their own upstream supply chain is altered significantly, and have them complete a new questionnaire. In the longer term, suppliers in the low-risk category need to be encouraged to work toward sourcing all their timber from credibly certified forest sources.

Low-risk suppliers should supply the following documents as evidence that the timber in their products originates from known licensed sources:

High-Risk Suppliers

Suppliers will fall into the high-risk category because they did not supply sufficient reassurances or objective evidence to prove that they could remove illegal timber from their supply chain. The range and types of objective evidence that suppliers can provide vary greatly from one country to another. The country guides cover the key issues for specific countries and the types of evidence you need from the forest and timber sector in that country. In addition a more general view of documentary requirements for timber from different countries can be found here.

In many cases, official government documentation alone is insufficient to guarantee legality, because the regulatory infrastructure may be corrupt and/or ineffective. In such circumstances, even "official letters" on government department letterheads (such as Certificates of Origin and so forth) claiming the legality of a shipment should be treated with the utmost suspicion. You will need to seek additional reassurances.

For suppliers and product lines rated as high-risk in an initial assessment, you can adopt various strategies to ensure that risk is mitigated to a lesser or greater extent.

Supplier Warranties

If a supplier is not willing to provide you with transparent information about its own suppliers, a way forward might be to obtain a supplier warranty from them. A supplier warranty is a written commitment from your supplier that it will supply you with products in accordance with the warranty. This will form a part of the commercial contract with your supplier.

You can ask the supplier to warrant that the products supplied will comply with your definition of legal timber. Your contract can specify the consequences of the supplier breaching the warranty, including termination of the contract for cause and consequent rights to damages. Genuine suppliers will develop their own Keep it Legal systems to ensure that they comply with this warranty and to keep you as a customer. A less committed supplier might sign the warranty but run a calculated risk that any illegal timber entering their supply chain will go undetected by you or others. Because the promise they make is not checked by an independent organization, the level of risk you would be taking on by relying only on a supplier warranty is relatively high. But it is a step in the right direction and you may be able to claim damages if you find out from a third party that the supplier's products contain illegal timber.

Second-Party Audits

It is entirely possible that you will meet resistance from your supplier with regard to providing information on the business that supplies them. One likely reason for this reluctance is that they will fear that you want to eliminate them from the supply chain. If you are unable to persuade suppliers to provide this information, there are alternative solutions. You can engage an independent organization or second party to gather the appropriate information under strict confidentiality guidelines. This will prevent the revealing of any information that would identify an element of the supply chain. This is a more costly option, but it could prove cost-effective in the long run if it allows you to identify your forest sources and demonstrate that the timber you are using was legally harvested. This information can be used to target markets such as the US to meet the due care requirements of the Lacey Act amendment, the EU Timber Regulation, the Australia Illegal Logging Prohibition Bill, the public procurement sectors in some Western European countries or the US that are now asking for this level of assurance about their timber purchases. Some of the organizations that undertake second-party audits include:

Global Forestry Services - www.gfsinc.biz
ProForest - www.proforest.org
Tropical Forest Trust - www.tropicalforesttrust.com
Other organizations offer similar services.

Other organizations offer similar services and this list is not exclusive or confer a recommendation on any of the above organizations.

Legality and Third-Party Audits

Third-party audits are recommended by WWF’s GFTN for high-risk suppliers and are a key element of the verification requirements for the verified-legal timber classification. The third-party auditor must check both legal compliance in the forest and the integrity of the chain of custody to ensure against mixing with illegal timber.
Several independent verification organizations now offer legal verification services and third-party audits. These companies generally claim that their service is the only truly independent one because they avoid conflicts of interest by either not undertaking any consultancy work or, if they do, by keeping the work entirely functionally separate from their auditing work. To provide additional rigor to their auditing role, many such inspection bodies employ accreditation bodies that inspect them to make sure their independence is not compromised and that their work is of a consistently high standard. Organizations offering a form of legal verification include:
Bureau Veritas - www.bureauveritas.com
Certisource Timber - www.certisource.net
Double Helix - www.doublehelixtracking.net
Rainforest Alliance - www.rainforest-alliance.org
Scientific Certification System (SCS) - http://www.scscertified.com/nrc/legalharvest.php
SGS - http://www.forestry.sgs.com/timber-legality-traceability-verification-tltv
Soil Association - www.soilassociation.org/forestry

Other organizations offer similar services and this list is not exclusive or confer a recommendation on any of the above organizations.

Timber Legality Schemes

Within the forest sector the 1990s saw increasing use of private sector mechanisms to attempt to address deforestation and secure sustainable forest management, most notably forest certification. While certification has had beneficial effects, its uptake has been uneven. Unfortunately certification was least successful in the regions where the need for it was the greatest, in particular the Amazon, Congo Basin and Borneo.

Although a number of international efforts such as the World Bank’s Forest Law Enforcement and Governance (FLEG) and the European Union’s (EU) Forest Law Enforcement Governance and Trade (FLEGT) have been made to address the issues, in particular illegal logging, many countries continue to have major problems within governance, corruption and maladministration. Due to its operational circumstances, the forest sector is often particularly prone to these issues and as a result many tropical timber producing countries are regarded as ‘high-risk’ in relation to forest management and the overall quality of governance.

It has become increasingly clear that while international efforts such as the EU FLEGT Voluntary Partnership Agreements (VPA) offer comprehensive solutions within its scope of agreement, the time when the first VPA-compliant timber is available remains many months or even years away. It will therefore be a very lengthy, process to roll out similar measures across the majority of high-risk countries, and given the voluntary nature of these agreements, it is likely that some countries can decline to participate at any stage.

At the same time, the pressure for responsible timber procurement has increased with measures such as the US Lacey Act and the EU’s Timber Regulation and the Australian Illegal Logging Prohibition Bill. With certified timber supplies from high-risk countries still low, widespread improvement through international governance years away and still few examples of credible national government-led legality verification in high-risk countries, it has fallen to the private sector to develop and implement practical solutions. There has been increasing acceptance among commercial and NGO sectors that while credibly certified responsible forest management should remain as the ultimate goal, the use of ”legal timber” can be a useful interim measure on the road to achieving this.

New Challenges

As with the early days of forest certification, while the market takes time to understand the concept of legality, a number of private sector legality verification schemes have been set up. Similarly, a wide range of credibility, trustworthiness and integrity can be found among them. This means that timber buyers need to understand how these legality verification schemes operate to ensure they do not just automatically verify ”business as usual”, and actually guarantee certain minimum legal requirements are being verified and actually being met in the field.

To provide an acceptable level of reliability legality verification schemes have to operate in a credible manner and operate within a known framework. Key elements of legality verification schemes can be seen as:

Definitions of Legality

At the core of legality verification lies the definition of legality. Preparing a definition of legality can be a challenging task. Ensuring this is done through a multi-stakeholder process will help ensure the definition is credible and fair. However, there are some difficult issues to address nevertheless. Key to these is the scope of the legality definition. If one considers all the laws in force in a country that may be applicable to forestry companies, this can often run into a large number of individual pieces of legislation. When talking about forest legality, do we really mean all laws or just the most important ones for forestry, and which ones would they be?

The ”speeding logging truck” is often used as an example to illustrate the problem. If a logging truck is caught traveling over the speed limit (i.e. it has broken an applicable law), should we consider the logs to be illegal, even if they were harvested and transported in accordance with the laws up until that point? Many people would see this is absurd as it fails to address the core issues of illegal logging.

In reality given the complexity of existing legal frameworks, most legality initiatives have chosen to restrict legality standards to a critical sub-set of laws and regulations. These fall into two broad categories:

In addition, VLC often includes requirements for legal processing, including compliance with domestic processing quotas, guarantees against mixing with non-legal sources and payment of processing levies; and legal trade and export including export licensing, procurement of necessary CITES authorization and customs clearance.

Key Elements of Legality Verification Schemes

Depending on national context and the objectives of verification, a legality definition might include some or all of the above components. Therefore, it is very important to understand the scope of the legality definition used in a particular verification audit. Making sure the key elements are included in the legality definition and how this is verified will ensure the credibility of the verification.

In an effort to support the development of a more consistent and common approach to legality verification, the GFTN and TRAFFIC developed a forest-focused set of principles and criteria covering key legality issues – the Common Framework for Assessing Legality of Forestry Operations, Timber Processing and Trade. This legality framework can help both regulators and companies, particularly GFTN members in countries of export and import, to identify the key legal requirements for VLO and VLC.

Legality Verification in Challenging Conditions

The need for legality verification is derived from the incapacity or failure of governance structures to ensure the rule of law within the forest sector. However, legality verification can never be a substitute for competent forest governance and, to a certain extent, depends on the existence of functioning governance structures in order to operate. It is therefore necessary to always consider the background governance situation, and the weaker these are, the more carefully the verification process should precede. For example, while the legality verification schemes in operation have the potential to address the issue of corruption in the allocation of harvesting rights—uncovering corrupt practices is notoriously difficult, and forest legality verification teams are unlikely to obtain access to necessary information to investigate these.

Similarly, in many cases when conducting a legality verification audit, the objective evidence needed to verify compliance with a law is derived from the national governance system. For example, harvesting block closure authorization by the forest authority may be the means of verifying that harvesting complied with key forest laws. The question arises where forest governance is weak, should the verification body seek some triangulation of evidence from the field or accept the block closure approval as appropriate objective evidence? The weaker the governance, the less likely a verification based solely on this type of evidence will be credible. However, verifiers may find it very difficult to get access to corroborate authority-derived evidence.

Further information regarding governance in forest producer countries is available from Transparency International.

Issues with Audits

Second- and third-party audits are regarded as the best means of determining the legality of a supplier. However, there are issues to consider concerning the level of assurance provided. Auditors are only on site for the duration of the audit, maybe only two or three days. Many observers ask what happens when the auditors are not present, particularly with respect to high-risk suppliers. Evidence suggests that some suppliers put on a special "show" for auditors and then revert to normal practice as soon as the auditors have left the premises.

Your local trade body will probably be able to suggest a certification body with appropriate skills in the timber sector. It is also wise to ask for recommendations from NGOs, including your local GFTN manager.


8.4 Steps to Exercise Due Diligence

Environmental Status of Supplies

Key Points in Excercising Due Diligence

Because simple, objective evidence demonstrating legality is rarely available from countries with the highest levels of illegal harvesting, your organisation will need to identify which suppliers are most likely to be able to comply with your company's aims and which are least likely—that is, which suppliers present the lowest risk of supplying illegal timber and which suppliers present the highest risk.

Your organization will need to develop systems for assessing and rating risk (risk rating). Risk rating allows you to do the following:

Step 1 - Assessing the Level of Risk

Risk rating is used to assess the likelihood that a given non-certified product from a given supplier contains illegally sourced timber. Rating suppliers based on this risk considers a range of information from various sources, some of which is available in the public domain and some that is provided by the suppliers themselves.

Risk rating consists of the following activities:

Requesting Suppliers to Complete and Return Questionnaires

The first step in the risk rating process is to send questionnaires to your suppliers. A model questionnaire and guidance that can be adapted for use in your organization is available here.

Analyzing the returned questionnaires using scenario tables
The returned questionnaires need to be systematically analyzed so that suppliers can be rated between high-risk and low-risk. The risk of illegal timber being traded along a supply chain can be broken down into three broad elements.

  1. Country of origin of the timber. There are risks associated with the geographical source of the supply. If a supplier is based in a country from which high volumes of illegal timber are exported and that supplier is unable to provide objective evidence demonstrating legality, then the risk that the timber is illegal is high. The scenario tables indicate the type of regulatory infrastructure that is most likely to encourage trading in both legal and illegal timber. Ratings for some countries are suggested, based on estimated rates of illegal logging or "suspicious" sources in those countries.
  2. Supplier company's attitude. The way a supplier operates with regard to a range of issues, such as its own general sourcing policies, how it relates to stakeholders and its attitude toward local communities, has been shown to be strongly linked to that company's attitude to buying and supplying illegal timber. The questionnaire asks a number of questions in this respect.
  3. Supply chain complexity. The way a supplier sources timber from its own suppliers is key to the risk of it trading in illegal timber or timber products. The questionnaire requests various types of objective evidence to assess whether sufficient supporting documentation has been gathered. You can analyze these three elements using the scenario tables. The analysis uses three different scenario tables, which relate to different sections of the questionnaire. Although indexes tend to be difficult to justify in purely scientific terms, they provide a systematic means for analyzing questionnaires. For example, the UK Timber Trade Federation, which used scenario tables for field trials (using a very similar approach), showed that the tables were effective and the results were independently repeatable.

In an ideal world it would be possible to calculate a risk rating for each product that you purchase—that is, each product in your inventory that carries a unique product code would have an individual risk rating. In reality this may not prove cost-efficient because of the difficulty of gathering any meaningful information on a product-by-product basis. Experience has shown that a more practical approach may be to group products into product categories, such as redwood mouldings from company X, rather than rate each individual molding (with all their different dimensions) supplied by company X.

Any supplier that has not returned a questionnaire within the specified deadline is automatically classified as a high-risk. The assumption is that the supplier was either unable or unwilling to supply the required information or too badly organized to do it. The importance of receiving the supplier's objective evidence to support the questionnaire answers cannot be overemphasized.

Examples of objective evidence can be found here. A completed questionnaire without objective evidence is just a self-declaration. Experience suggests that self-declarations without supporting evidence cannot be relied on.

Feedback to Suppliers and Monitoring for Continuous Improvement

The analysis of the questionnaire to reach a supplier rating has the added advantage of identifying weaknesses in the supplier's responses. It is then possible to give suppliers feedback, explaining how their score was derived and the types of actions needed to reduce the score. It is therefore possible to provide practical advice (without necessarily being specific or an expert) on how they can reduce their risk rating—an additional benefit to the supplier for completing the questionnaire. The types of actions that will move suppliers from the high-risk to the low-risk category are discussed later in this section.

Some suppliers may rate as high-risk in terms of supplying illegal timber in the initial assessment but they may strive to improve by changing their practices so that on subsequent assessments their risk-rating score improves. Others' ratings may change very little over time. It is important to maintain records that demonstrate how suppliers have improved their performance and processes over time. Experience suggests that suppliers who are unwilling to make adjustments to comply with a buyer's sourcing policy requirements are potentially also those more likely to trade in illegal timber. Over time you may wish to stop trading with these suppliers and replace them with companies that seek to support your commitments.

Data Management

Managing the whole process of supplier assessment involves sending out the questionnaires, following up with suppliers to get them to respond, capturing their responses and the associated objective evidence, analyzing the returns, and then reporting the results to all relevant parties. This process can be demanding in terms of management time. You will need an electronic database system and/or well-organized manual filing system to maintain the process.

Step 2 - Make Further Enquiries Where Needed

Once you have assessed the risk associated with a given product range from a given supplier and decided what kind of verification process is required, the next step involves implementing that process and, over time, progressively eliminating sources that are unable to provide the verification required.

One key strategy will be to make follow-up enquiries with suppliers that have provided weak responses to the questionnaire. Suppliers rated through the questionnaire assessment as being high-risk are likely to have not provided any or enough supporting evidence; thus the questionnaire, if returned, will be largely a self-declaration. You will need to either ask the supplier to provide more evidence or investigate the timber
source directly.

Gathering information from the upstream parts of the supply chain is frequently difficult. Traders are concerned about issues such as confidentiality, particularly if they occupy a "middleman" position in the supply chain. They are concerned that the objective evidence will reveal the identity of their supplier and that you may begin trading directly with the upstream end of the supply chain. Also, suppliers occupying an intermediary role may have great difficulty getting the information from those upstream from them, particularly if they only buy a relatively small percentage of their supplier's total production; that is, they have limited leverage. Sometimes the objective evidence you require just does not exist.

Step 3 - Improve Traceability and Verify Legality

Certified timber is tracked using inspected and verified chain-of custody systems that enable you to easily answer the question, "How did it get here?". Timber and timber products that supposedly originate from a certified forest but are not accompanied by a current and credible chain-of-custody certificate cannot be regarded as certified because the chain-of-custody has been broken and illegal product may have become mixed with the certified product. Chain-of-custody certificates apply only to timber and timber products from a certified forest. If a product comes from a verified legal forest, traceability is just as critical.

A key component of ensuring that timber is kept legal once it leaves the forest and enters the supply chain is to prevent illegal timber mixing with it. If legal timber and illegal timber are mixed, the whole product line can be "tainted". Once timber has left the forest, its legal quality can only be recognized if it can be shown to have come from that forest—in other words, traceability.

Without traceability, verification of the legality of forest management is largely a waste of time. The supply chain, or as some prefer to call it the demand chain, must have a dependable level of integrity. An efficient way of achieving this is to encourage suppliers to develop a system for tracing all timber and timber products from their own suppliers.

If you take the demand chain view, traceability should start at the downstream end of the chain and steadily be applied back upstream toward the forest. Traceability implemented in this manner will have a strong commercial orientation with a greater likelihood for successful implementation, with each business that forms a step along the demand chain benefiting.

Logs, timber and processed timber goods start their journey in the source forest and are then processed by primary and possibly secondary processing industries, exported, possibly transshipped and imported. All this may happen before the goods finally fall under your organization's control. Although it is critical to identify the source forest, it is also critical to make sure that the timber from that source forest is what you receive, rather than illegal timber that has infiltrated into the supply chain en route.

The traceability of the supply chain is vital for ensuring that you receive goods containing legal timber and that there is no "laundering" of illegal timber. In practical terms, it can be expensive and, in some cases, physically impossible to track timber down highly complex or fragmented supply chains. Complex supply chains will always be more likely to support the laundering of illegal timber.

The risk-rating system takes into consideration the potential for dilution of the supply chain by illegal timber. In high-risk situations that have a history of laundering timber, mixing legal and illegal timber to yield "legal" timber, the best option to ensure a clean supply chain is by tracking the timber from the source forest to the physical location where it comes under your organization's control. Without such tracking or traceability in their supply chains, your suppliers will be unable to meet your verification requirements for a verified legal or known licensed source or any other verification approach, such as those described below.

Traceability can be achieved through various combinations of paper- and technology-based tracking systems. In many countries where the trade in illegal timber is a problem, elaborate official paper-based systems have been implemented to theoretically track the movement of timber from the forest to the point of export. This has included the use of unique government certificates or permits covering the transportation and movement of timber in general. These documents are often linked with national forest legislation, and in many cases, it is illegal to transport timber without the necessary specific official permission accompanying the timber or timber products.

However, such systems can easily break down in countries where the regulatory capacity is weak because of a lack of resources or because of corruption, where the forest areas to be regulated are huge, or where the government has no means to manage data centrally. To make matters worse, modern printing technologies have made it relatively simple to corrupt paper-based systems with virtually indistinguishable false or forged paperwork.

Nevertheless, paper-based documentation is still the mainstay of traceability systems and is likely to be so for some time. A good understanding of the system that produces documentation, and familiarity with the "look and feel" of relevant documentation, will provide a measure of confidence and some safeguard.

To assist with this, WWF has produced a series of Keep It Legal Country Guides (in PDF format) for Brasil, China, Indonesia and Russia, for use in conjunction with this guidance, that describe how these paper-based systems operate in reality and their strengths and weaknesses.

The feasibility of tracking timber has increased significantly as Internet-related technologies and services have become more effective, cheaper and more accessible. Unreliable paperwork combined with scribed or painted identifiers on the end of logs are starting to be replaced by bar-coded tags and radio frequency identification devices (RFIDs) with the data capture carried out with handheld personal computers (PC). This enables the tree-related information to be scanned electronically and uploaded from the handheld PC directly onto the Internet, and from there it is stored in dedicated database systems. These modern technologies provide the opportunity to link individual standing trees in the forest with the logs produced from them in a much more secure manner than was possible in the past. These approaches rely on the standing trees in the forest being tagged and then the data on its position and main parameters (height, species and diameter) all being captured on a database. The systems are made secure by using uniquely identifiable tags that are linked to the key tree measurements and resultant log metrics through a record on the database. More information on timber tracking systems can be found below.

Any supply (or demand) chain has a number of critical control points along its length. Critical control points are locations at which the timber undergoes basic changes, for example, where the trees are felled, where the logs are loaded onto a log lorry and where the logs enter the sawmill. The Internet enables information from these critical control points along the supply chain to be aggregated in a single online database, no matter how remote the geographic locations of the critical control points are or what companies are involved. To manage all or part of a supply chain efficiently, you need information on how the product is moving along the supply chain. An Internet-driven system of the type described helps those collecting the information to benefit directly from their efforts as they receive reports containing key management metrics that are compiled and made available the instant any new "flow" information arrives at the database.

In an ideal world, in countries where the risk of illegality is high, the timber or timber product would all be tracked from the standing tree in the forest to the point where it enters your warehouse or comes under your organization's control. The reality is that, currently, little tracking of the types described is taking place. It is a new approach and is being adopted only by the more innovative and forward-looking operators.

Tracking, if appropriately implemented, should help a business operate more efficiently. Information from tracking can be useful for forest managers, in terms of monitoring the volumes and species being harvested from each location, mill owners, in terms of knowing what logs, species or timber products are coming out of the forest and when they may arrive at the mill, the regulatory authorities, in terms of being able to verify the legal right of a specific forest operation to transport timber and for estimation of revenues to be collected, independent auditors wishing to audit legality.

Many of the business benefits have yet to be fully realized. Currently, log and timber tracking is principally seen as a system of control that is used by government and verification organizations rather than as a business tool. Once these systems are more widely implemented and understood, it is likely their full value will be better appreciated. (For a more detailed review of timber tracking and chain of custody systems, see Dykstra et al., 2003, Technologies for Wood Tracking Verifying and Monitoring the Chain of Custody and Legal Compliance in the Timber Industry.) 

A promising recent technological advance is the use of DNA fingerprinting to prove the source and traceability of timber. Each individual tree has a unique genetic code (DNA) and code variations between individuals can be modeled to predict codes across a given geographical area. The primary use is to verify source by matching the DNA from samples taken from individual stumps in a source concession with the DNA from associated logs at a processing mill. The second, and possibly more powerful, method amalgamates the DNA data gathered from individual testing into a genetic database covering a geographical area.

The database allows samples taken from anywhere to be compared with known spatial DNA variations in order to pinpoint actual source to a geographical range. Certisource Timber has tested this technology in Southeast Asia and is currently able to undertake DNA matching for Merbau, Teak, Nyato, Mersawa and Matoa species.

Some companies that provide log and timber tracking services include:
Certisource Timber - www.certisource.net
SGS -www.sgs.com
TracElite - www.tracelite.com
Track Record - www.trackrecordglobal.com
Other organizations offer similar services.


8.3 Uncertified Timber - Reducing the Risk of Buying Illegal Wood

Reduce the Risk of Buying Illegal WoodIn an ideal world, as a sourcing organization, you would state that you did not want any illegal timber or timber products in your business's supply chain; you would then pass this specification to your suppliers and they would follow it. The outcome would be the delivery of legal timber and timber products.

In the absence of credible certification, a chain of custody; FSC Controlled Wood; third-party legal certification; or another form of certification that provides some assurance of basic legal compliance, the onus is on the purchaser to manage the risk of sourcing illegal wood. This process of due care or due diligence can be broken down in to a series of steps:

Suppliers in countries where significant volumes of illegal timber and timber products are traded often find delivering timber with legal verification very difficult. These suppliers often have little incentive to invest in legal verification systems. Their timber may be legal, but proving it takes significant extra effort and cost and therefore is not done. Suppliers can find it difficult to comply with the most basic requests for proof of legality for a range of reasons, such as the following:

In recognition of these realities, this section describes a four-step system to reduce the risk of having non certified timber that has been illegally harvested or traded enter your supply chain. The methodology is based on a range of practical experiences gained by traders, trade associations, and GFTN participants.

The next section outlines a systematic approach to evaluating the suppliers in your supply chains, including an assessment of the level of risk associated with each supplier and then, based on that information, the level or degree of legality verification needed. In addition, the methodology provides guidance on how to ensure that the timber arrives at the location you control without being substituted or diluted with illegal timber.


8.0 Environmental Status of Supplies - Reducing the Risk of Trading in Illegal Timber

Risk of Trading in Illegal TimberThe simplest way to reduce the risk of trading illegal timber is to buy and sell certified timber. For the majority of businesses involved in the timber sector, particularly those trading in tropical hardwoods, this is not an option because only modest volumes are currently available from countries or of some species.

Legal timber (that is not certified) is traded internationally every day of the year. For timber originating in countries with well functioning regulatory systems, the risk of trading in illegal timber is relatively low and stringent legal compliance auditing is not warranted. However, if the country of origin of the timber is uncertain, or the timber is known to come from a country with weak regulatory systems, the risk of trading in illegal timber is high. Addressing this risk requires commitment and vision by all those involved in the supply chain. In the US trading environment, this is known as exercising due care (with respect to Lacey Act compliance) and in a European environment this is known as practicing due diligence (with respect to EU Timber Regulation).

Timber legality can be viewed as a product quality issue. When you ask your suppliers to provide legal timber, you are requesting timber with a new quality: legality. If timber lacks proof of legality, it lacks the quality that you require. Timber can be attributed the quality, or status, of legality only in its forest of origin. It can maintain that legal quality only if it remains unmixed and is not diluted by illegal timber as it travels down the supply chain. Its legal quality can also be devalued by other illegal activities connected with its passage down the supply chain.

Two basic questions should always be at the back of your mind:

"Is the source legal?"
Where was the forest of origin? Were the ownership and access rights undisputed and free from the taint of illegality? Was the quality of the forest management and timber trades such that all timber purchased had the right 'legal' quality?

"How did it get here?"
Was the quality and traceability of the supply chain such that no illegal timber was introduced and the legal quality was not subsequently diluted?


7.6 Source Assessed in the Context of Exports to Australia

Aligned with international efforts, including measures developed by the United States and EU, Australia further strengthens its leadership position in the Asia-Pacific region in promoting trade in legally harvested timber and timber products by enacting the Australian Illegal Logging Prohibition Act (AILPA) and enhancing international cooperation to combat illegal logging.

AILPA was passed in 2012, a draft Amendment was issued in May 2013 and is expected to enter into law November 2014. The aims of AILPA are to reduce the harmful environmental, social and economic impacts of illegal logging and affects to Australian timber importers and domestic processors of Australian raw logs.

The regulation does not require a due diligence system to be created for each transaction.  Rather, the regulation requires the establishment of a single due diligence system that can be applied to each import. For example, an importer may establish a due diligence system and apply it to a particular product from a particular source.  The outcome of this process will be an understanding of the information and documentation required to be obtained when importing that product from that particular source.

However the regulation that outlines the operational framework for importers and processors will come into effect after 30 November 2014.

In addition, the regulation also provides:

  1. civil offence and penalties.
  2. Infringement notice provisions.
  3. Administrative sanction provisions.
  4. Identity card requirements.

The law does not impose any Australian legislation on the source country, but uses the laws that are in placed in the country of origin to determine illegality of harvest and trade.

 

The list of regulated timber products is prescribed in a Schedule of the Regulation (http://www.comlaw.gov.au/Details/F2013L00883). This list is closely aligned with the list of EU products, with some exceptions where the imports of those products to Australia are of low trade value and/or volume. It has fewer products than either the EU or US legislations and has an additional category relating to wooden framed seats.

Some products are exempted from the due diligence requirements of the Regulation. These include: timber products that are recycled material and any content of a timber products that are recycled material. Timber in a regulated timber product is recycled material if:

However, material in a regulated timber product is not recycled material if the material is the by-product of a manufacturing process. Examples: Sawdust or off cuts from sawn timber used to make particle board or plywood

 

Information the importer needs:

-          Evidence that the product has not been illegally logged

-          Information on whether the harvesting of that tree species from which the timber was derived is prohibited in the place of harvest or not

-          If the harvest of the timber in that place is authorised by legislation and regulation – proof that the requirements of the legislation been met for the harvest of that timber

-          If payment is required for the right to harvest the timber – proof that payment has been made

-          Information on whether the harvest of the timber was consistent with the law establishing or protecting the legal rights of use and tenure in the place of harvest or not 

 

Before importing a regulated timber product into Australia, an importer must have a due diligence system and retain a written record of that due diligence system. The requirements for a due diligence system may be summarised as a four step process to be put in place by an importer as set out below.

Step 1: Information gathering (section 10 of the AILPA)

  1. An importer must obtain as much of the prescribed information as is reasonably practicable. The Regulation includes a list of types of information to be obtained by an importer.

Step 2: Optional process - assessing and identifying risk against a timber legality framework (section 11) or a country specific guideline (once they are prescribed) (section 12)

  1.      ii.        Under the Regulation, in certain circumstances, an importer may elect to assess the risk that the timber in the product they are importing has been illegally harvested using either:

-          a timber legality framework that is prescribed in Part 1 of Schedule 2 to the Regulation; or

-          a country specific guideline (once they are prescribed in Part 2 of Schedule 2 to the Regulation). The Regulation requires that, should an importer elect to use this optional process, they must:

  1. Should an importer elect to use this optional process and, in doing so, assess that there is a low risk that the timber product is illegally logged, then the requirements under section 13 do not apply. In circumstances where section 13 does not apply, risk mitigation (section 14) also does not apply.
  2. However, risk mitigation does apply in circumstances where the importer is required to use section 13 and the risk that the timber product was illegally logged, as assessed under section 13, is not a low risk.

Step 3: Risk assessment (section 13)

  1.       i.        Where an importer has not used the optional process set out in Step 2, or where they have used the Step 2 process but they have identified a risk that the timber is illegally logged and the risk is other than a low risk, an importer must undertake a risk assessment in accordance with section 13.
  1. The Regulation requires the importer, as part of this process, to identify and assess any risks by taking into consideration the risk factors that are referred to in subsections 13(2) and (3).

Step 4: Risk mitigation (section 14)

  1. Where an importer has, during Step 3, identified a risk that the timber was illegally logged and the risk was not a low risk, an importer must undertake a risk mitigation process in accordance with       the Regulation.  The Regulation requires the risk mitigation process to be adequate and proportionate to the identified risk.

 

Timber sourced from certified forests (*FSC or **PEFC) will automatically be determined to be “low risk by the AILPA.

The act requires a declaration about the timber legality at the point of import of each shipment. Importers of regulated timber products must have declarations, at the time of import, to the Customs Minister about the due diligence that they have undertaken.

Detailed information on the AILPA can be found here: http://www.comlaw.gov.au/Details/F2013L00883


Questionnaires - Things to Consider

General guidance
Suppliers need encouragement in order to complete questionnaires. Below are some strategies, based on practical experience that can help get the questionnaires completed and returned.

Contact suppliers well in advance of them receiving the questionnaires to explain the commercial reasons for asking them to complete a questionnaire. This can be done by e-mail and should be backed up by a phone call.

Mail out the questionnaire with an accompanying letter explaining why you need this information and what the information will be used for. Emphasize that all commercial information they provide will remain completely confidential and will not be shared with anyone else, whether buyer or supplier.

Allow 2 to 3 months for a supplier to complete the questionnaire from the time that they receive it. It tends not to be a priority; also, the supplier may need time to gather the appropriate documentation. You will need to be prepared to answer questions and concerns that suppliers raise regarding the questionnaire.

Provide a deadline date for completion, stating clearly that if they fail to return a completed questionnaire, they will be rated automatically as a high-risk supplier. You may need to contact some suppliers just before the deadline to remind them what they need to do; you also may need to extend the deadline by a few days for some.

Emphasize that the supplier needs to provide appropriate objective evidence to support all self-declarations. This is still an inexact science. What constitutes objective evidence to support the answers to the range of questions will vary significantly from one country to another.

Make sure that the mill or manufacturer is answering the questions or supplying the appropriate information when the organization you have sent the questionnaire to is merely acting as an intermediary for a mill or manufacturer. Some intermediaries get concerned about confidentiality. If you deal with this type of organization, you may need to reassure them that you are not excluding them from the supply chain but merely want answers to questions: Where did it come from? How did it get here?

Ensure that all forest sources for each product are identified, if known. Although you may be asking a single supplier about a single product, if you purchase significant quantities, or different components of composite products, these may come from more than one source forest, and even more than one country. One of the sources may be legal and the other not, making an entire product line effectively illegal. Traceability is critical in such cases.

Below are some common issues that arise when suppliers are asked questions regarding their sourcing of forest products, along with suggestions on how to deal with them.

Supplier didn’t provide enough information—Major gaps in data make it difficult to make any form of assessment. Talk to the supplier and find out why it cannot or did not provide the data requested. If the supplier does not have the technical expertise, ask that it request its own suppliers to furnish the missing data and to collate these data for you. Agree on a date by which the data will be provided.

Supplier misunderstood a question—Make contact with the supplier and explain why you are asking the question and what sort of answer you require.

Supplier refuses to complete the questionnaire—The supplier may refuse to complete questionnaires or provide data. Lack of resources is a common excuse, as is “company policy.” Explain to the supplier that your requests are valid and that you routinely make this request of all your suppliers. Small suppliers may have genuine concerns about committing time and resources to providing data; in such circumstances agree that the data can be provided in small segments over an agreed-upon period of time. Suppliers that continue to avoid supplying data should be given an ultimatum, after which they should be removed from the supply chain. This is a last resort, however, and the intervention of senior management on both sides may be useful to maintain a dialogue and to avoid this.

Concerns over confidentiality—In some industries and in some countries it is common to experience concerns over the confidentiality of supply chain data. This can be overcome in a number of ways, ranging from giving the supplier verbal assurance that the data are used for environmental and quality control purposes and will not be used in a commercial context, through to giving the supplier a signed confidentiality agreement. The provision of data may have to be made in a manner that furnishes the required information without revealing the names of commercial intermediaries or processors. However, full disclosure is preferred and may come in time as part of an action plan.

Supplier “does not feel responsible”—Some suppliers do not feel obliged to respond to requests for supply chain data. Arguments can vary, from a position of “being too small to have any effect” to “it is none of your business.” Suppliers in this situation should be given an opportunity to reflect on their position. Experience has shown that companies with little regard for their customers’ expectations and requirements usually fail. If a supplier cannot change its opinions and recognize your point of view, it should have no place in your supply chain.

Supplier cannot provide evidence of legality—Depending on your supplier’s place within the supply chain, obtaining such proofs may prove difficult. Those supply chain elements furthest removed from the forests or primary processors will experience the greatest difficulty in obtaining the required documentation. You have several options to address this difficulty: Give the supplier more time to obtain the documents required.

Encourage the supplier to source forest products in less controversial areas.
Encourage the supplier to seek independent certification for its forest products.
Encourage the supplier to obtain a third-party legal verification audit.


7.0 Environmental Status of Supplies - Source Assessed

Known Licensed SourceThe classification "Source Assessed" involves that the forest source has been evaluated for basic legality and traceability criteria-

Criteria

Requirements

Other inclusions

The sourcing organization should assess the issues and risks associated with the illegal harvesting and trade in forest products and develop policies and definitions that are a balance between stakeholder expectations, the level of risk and the practicality of enforcement.


3.2 Main Policy Elements

Unacceptable SourcesResponsible purchasers should develop an environmental policy or set of policies that exclude unwanted forest sources. The list of unwanted sources, and the precise terminology used to describe them, will vary according to the social and environmental issues of concern to the organization and its stakeholders.

Unwanted Sources

WWF recommends that, at a minimum, sourcing organizations regard timber or fibre as unwanted if the following conditions exist:

  1. The source forest is known to or suspected of containing high conservation values, except where the forest is certified or in progress to certification under a credible certification system, or the forest manager can otherwise demonstrate that the forest and surrounding landscape is managed to ensure that those values are maintained.
  2. The source forest is being converted from natural forest to a plantation or other land use, unless the conversion is justified on grounds of net social and environmental gain, including the enhancement of high conservation values in the surrounding landscape. More information on WWF's work concerning forest conversion can be found here.
  3. The timber was illegally harvested or traded.
  4. The timber was traded in a way that drives violent armed conflict or threatens national or regional stability (i.e. what is commonly called conflict timber).
  5. The harvesting or processing entity or entities, or a related political or military regime, are violating human, civil and traditional rights.
  6. The timber is from genetically modified trees.
  7. The source forest is unknown.

Note: The seven categories of unwanted sources eliminate most activities from the supply chain that preclude credible certification. These items also are closely linked to the requirements for the Forest Stewardship Council (FSC) Controlled Wood Standard.

This list is a minimum, and other elements should be introduced to reflect stakeholder concerns that are identified. More information on these categories is available here.

Acceptable Sources

The organization will also want to consider what is the minimum acceptable in terms of policy. Acceptable sources of wood or fibre, in descending preference might include:

  1. Material from credibly certified forests / recycled material
  2. Material from verified sources forests which has been 3rd party verified for basic social and environmental criteria.
  3. Material from assessed sources which have been evaluated for basic legality and traceability. 

In all cases compliance with all aspects of the purchaser's policy should be the desired state.

Examples of forest products sourcing policies can be found here.

Note for GFTN Participants: GFTN participant companies are required to agree policies that, as a minimum, cover these key elements.

Scope - What to Include

The scope of the policy may vary from one sourcing organization to the next—such as, the inclusion or exclusion of forest products intended for resale only, forest products sold under "own brand" or "store brand" only, forest products procured for service use and not for resale (for example, copier paper) and forest products used within the fabric of buildings (for example, wooden doors or floors in new offices or factories).

Therefore, the scope of the policy is flexible and can expand overtime. Best practice dictates that the scope of the policy be set to apply to the largest impact area of the business; for example, a retailer should consider its largest selling range of forest products before its office copier paper.

It would also be prudent to consider market based legislation, existingand evolving, to ensure that the policy at the very least covers material affected or potentially affected.

The policy should also include:

The policy and any associated documents should be the responsibility of senior management within the sourcing organization and should have the same level of endorsement as any other of the sourcing organization's policies (such as those on health and safety or discrimination).


5.4 Rating of Suppliers' Compliance with Policy

Establishing TraceabilityIn an ideal world, once an organization has defined a timber sourcing policy, it could present it to suppliers and they would then follow it. The outcome would be the delivery of products that fully comply with the organization's policies and specifications. However, the reality is that suppliers can find it difficult to comply with the most basic requests for proof of policy compliance for a number of reasons. Therefore, suppliers' compliance with the sourcing policy requirements may take considerable time and effort, and non-compliance may be the norm in the early stages of an organization's policy implementation.

Therefore, the first step for any buyer is to identify which suppliers are most likely to be able to comply with the policy, that is, those suppliers who present the lowest risk of supplying non-compliant products, and which suppliers are least likely to comply with the policy and therefore, present the highest risk of supplying non-compliant products.

By using systematic risk-rating methodologies, it is possible to develop future sourcing strategies based on the risk rating of suppliers, highlight actions that would help suppliers reduce their risk rating and monitor suppliers' progress toward being able to supply policy-compliant product.

In an imperfect world, rating suppliers based on risk presents the best way forward and the next step toward achieving full implementation of the sourcing organization's responsible sourcing policy.

More information on a risk-rating methodology, with a particular emphasis on legality, can be found here. Rating of suppliers is done using a range of information, some of it available in the public domain and some of it provided by the suppliers themselves. The rating process is really an assessment of the characteristics of a supplier that can be trusted to do its best to avoid noncompliant trading of products.

The basic system relies on the following actions:

  1. Sending a standardized questionnaire out to all suppliers
  2. Making sure the questionnaire is completed by the suppliers and returned
  3. Making sure that, where possible, suppliers provide appropriate objective evidence to support the questionnaire answers
  4. Using a straightforward and justifiable means of systematically assessing each returned questionnaire and giving the supplier a risk rating accordingly
  5. Giving suppliers feedback that lets them know what they need to do to improve their risk rating
  6. Implementing a means for monitoring continuous improvement, that is, whether or not suppliers are improving their rating over time
  7. Using a set of procedures that can be independently verified in order to underpin the thoroughness and credibility of the whole approach

This process helps send a clear message to suppliers as to what is important to you as a buyer. It gives them direction when they are probably receiving many mixed signals from the downstream end of the supply chain.

Note for GFTN Participants: GFTN participant companies are required to establish a programme that will ensure traceability over a reasonable period of time. It is a central component of GFTN participation.


5.3 Questionnaires

Establishing TraceabilitySending out questionnaires can be a laborious and lengthy process. The number of suppliers that an organization uses and the complexity of the data required has a significant bearing on how long it takes to assemble the database. Three primary approaches can be used to gather the required data:

Examples of a questionnaire can be found here.


12.0 Environmental Status of Supplies - Checklist for Working Through the Steps of Environmental Status

Checklist


5.1 Traceability

Establishing TraceabilityThis section provides practical guidance on ways of gathering and assessing data on suppliers, species and timber origin. The purpose of gathering data on species and timber origin is to enable a detailed assessment of the sourcing situation.

 

 

The data gathered is more comprehensive than the initial review, permitting the sourcing organization to demonstrate how policy is being realized through the supply chain and how, over time, the sourcing organization is improving its profile and promoting responsible forest management.

 

 

Timber Origin (Traceability)

Achieving Traceability Defining the Environmental Status of the Material

From the time the policy is implemented and, specifically, to set a baseline from which progress and compliance might be demonstrated, a tracking system must be developed that identifies:

 

  • Forest(s) of origin of the timber or fibre (where the wood was harvested)
  • Species of timber or fibre
  • Volume and value of that timber or fibre
  • Description of the product

 

Each forest source should fall into one of the following categories:

 

  • Limited knowledge of forest source
  • Source assessed
  • Source verified
  • Credibly certified or recycled source

 


4.1 Communicating Policy

CommunicationsOnce a sourcing organization has developed a responsible forest products sourcing policy and implemented a programme of work, it is extremely important that it widely disseminates the information about its policy and all associated activities. At the very least, the policy must be communicated to colleagues and staff (most crucially, the organization's buyers of forest products), and suppliers that will be affected by the policy.

The sourcing organization may also choose to communicate the policy to other stakeholder groups identified in the review. The mechanisms for communicating the policy are varied and are best determined by the issuing organization.

Examples of ways to communicate the policy include the following:

Note for GFTN Participants: GFTN participant companies are required to demonstrate publicly their sourcing policy and will be required to demonstrate how this has been communicated to the supply chain.


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.

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.


2.3 Identifying Key Players That Need to Be Involved

Supply Chain Review It is essential to identify key roles within the sourcing organization that are critical to the success of complying with policy through delivering the programme. The roles will include senior management across a range of functions, including sourcing, environmental management, legal advisor, technical support and communications.

Without buy-in from across all levels in the organization, a successful responsible sourcing programme will be difficult to achieve. Therefore, it is essential to identify all key players early on in the process.


2.1 Setting the Bar

The initial review should identify what the expectations are of the organization from a variety of view points. To establish these expectations, at least five things must be considered:

  1. Regulation in the markets where the company operates
  2. The standards of best practice within the industry or sector;
  3. Stakeholder expectations of the organization, these can be internal as well as external;
  4. Any other relevant requirements or guidelines (e.g., Trade Association Codes of Conduct or the GFTN Participation Rules)
  5. An appreciation of the principles of due diligence and the standards expected in the operating environment

Once this information has been collected, it will be possible to define what needs to be achieved in terms of overall targets, policies and processes.

The review should include analyzing the expectations of the following stakeholder groups:

From this investigation, a set of draft policies that reflect the sourcing organization's values and stakeholder expectations can then be developed. These can be formalized through senior management support.


3.3 Examples of a Responsible Forest Products Sourcing Policy

Responsible Forest Products Purchasing Policy

Example 1

This organization is committed to the responsible sourcing of forest products. Our long-term intention is that all timber used in products that we purchase or specify is sourced from well-managed forests that have been certified to credible certification standards and/or are from post-consumer recycled materials.

This commitment will be realized through a stepwise approach to responsible sourcing that uses the best available techniques and information.

This organization will not source products containing timber, fibre and other raw materials if the following apply:

To ensure that these goals are achieved, this organization will:

Example 2

RESPONSIBLE SOURCING POLICY - FOREST PRODUCTS VISION STATEMENT

As a [public/business/opinion] and global leader, [COMPANY NAME] is committed to leveraging our influence in the marketplace to conserve, protect and restore natural resources. As a cornerstone of that commitment, [NAME] will pursue a Responsible Timber Sourcing Programme to promote the development of markets for environmentally responsible forest products.

PREAMBLE

[NAME] recognizes that leadership in the global marketplace carries a responsibility to the environment and, in particular, a responsibility to promote the conservation, protection and restoration of the world's forests. [NAME] is a leader in [a market/public/opinion sector that is relevant]. Therefore, [NAME] is positioned to influence [supply and/or demand] in the market and thus contribute to the development of environmental solutions that influence responsible forest management. [NAME] fully supports responsible forest management practices that promote ecosystem sustainability, biodiversity and long-term environmental, social and economic benefits.

Toward these ends, [NAME] hereby establishes the following policy commitments:

POLICY

  1. [NAME] will work with all vendors and associated suppliers to trace the origin of our current products.
    Explanation:
    Traceability in the forest product supply chain is crucial to assessing whether or not the forest products used were derived through environmentally responsible means. [NAME] will attempt to determine not just where current products were purchased, but where the timber in those products was grown, taking into account the possible necessity for third-party verification.
  2. [NAME] will require that all vendors and associated suppliers demonstrate compliance with all legal requirements for forest management, timber harvesting and related trade, with third-party verification in high-risk areas.
    Explanation: [NAME] will work to ensure that no market advantage is realized by entities that circumvent the law and encourage support for forest conservation, protection and environmental law enforcement mechanisms.
  3. [NAME] will reduce and by [DATE] eliminate its purchase of wood, paper and other products containing timber from controversial sources, including conflict timber, entities accused of human, civil and traditional rights violations and genetically modified trees.
    Explanation: [NAME] intends not to give support to regimes and practices that have a detrimental impact on civil society or the environment. [NAME] will remain aware of controversial source areas that may be identified by internal and external stakeholders and will adopt a precautionary approach regarding the use of genetically modified trees, which pose risks to native species and may cause large-scale disruptions in the ecological food web.
  4. [NAME] will reduce and by [DATE] eliminate its purchase of wood, paper and other products containing timber from harvesting operations that threaten high conservation values or involve unjustified conversion of natural forest to other land uses.
    Explanation: [NAME] intends to expedite the transition away from forest harvesting practices that lead to environmental degradation and will embrace a scientifically credible, land-based assessment to identify and appropriately manage forests that contain exceptional environmental and social values. [NAME] will regard high conservation value as safe from threat if the forest is certified or in progress to certification under a credible certification system, or if the forest manager can otherwise demonstrate that the forest and/or surrounding landscape is managed to ensure those values are maintained. Similarly, [NAME] will only accept conversion as justified in the rare circumstances that it can be justified on grounds of net social and environmental gain, including the enhancement of high conservation values in the surrounding landscape.
  5. [NAME] will promote the appropriate and efficient use of wood, paper and other forest products.
    Explanation: [NAME] intends to contribute to efforts that maximize use of the entire fibre resource and assist in the reduction of per capita consumption.
  6. [NAME] will advocate and incorporate the use of sustainability-based criteria in selecting alternative materials.
    Explanation: [NAME] intends to support the expansion of the natural resource base and promote life-cycle assessment as a metric of environmental merit.
  7. [NAME] will give sourcing preference to products from credibly certified, well-managed forests and those from suppliers that have made a commitment to progress toward credible certification.
    Explanation: [NAME] intends to promote the development of markets for environmentally preferable products by supporting certification of best management practices through the purchase of credibly certified forest products, when price and availability allow.
  8. [NAME] will publish and distribute to all interested stakeholders an annual report, which will detail our progress in implementing this policy and commitment to continuous improvement.
    Explanation: [NAME] will seek to maintain open communications and collaborative relationships with all stakeholders interested in our environmental performance by providing standardized information about our environmental performance on an annual basis.

7.1 Defining Legal Timber

Environmental Status of SuppliesTo direct your organization's sourcing away from the products of illegal logging and toward those in favour of legal operators, you will need to define what you mean by "legal" or acceptable sources. That definition should exclude products or activities that fall within the scope of the problem defined in your policy. The scope of concern may be broad, and thus be difficult to comply with, or narrow, which would run the risk of not addressing key issues. A balance between these extremes needs to be struck.

Verifying that the timber in a product is from a source assessed requires the purchaser to obtain proof that, in addition to having the ownership and access rights, and a legal right to harvest, the harvesting entity complied with the law when harvesting the timber and that the timber was legally traded and exported or imported. The category also requires a higher degree of scrutiny over the chain of custody. Forest management certification systems that require independent chain-of-custody audits can also provide this level of assurance on legal compliance.

You should also be guided by any market based legislation (Lacey etc) – as these laws and regulations will provide more detail as to the scope of legislation they require must be considered. 

Which Laws Apply?

There can be challenges in determining what constitutes an illegal act and interpreting global definitions within the context of the legal system of a given producer country. These challenges include the following:

In many producer countries efforts are underway to better understand and then to define the laws that are relevant to forestry and associated trade. These processes are seeking to also address the apparent contradictions and to provide workable solutions using multi-stakeholder processes, often within international frameworks supported by the relevant Government agencies. A good example of this international process is the Forest Law Enforcement Governance and Trade (FLEGT) process. 

In many jurisdictions, rationalization and clarification of such issues are clearly needed to enable effective law enforcement. However, where laws are unclear, best practice for sourcing organizations, suppliers and auditors is to note the flaws in the relevant laws and state clearly the basis on which verification has been assessed, including, where possible, the rationale for the interpretation by the verifier.

In other countries, standards, criteria and checklists relating to legal compliance may have been developed for forest certification purposes. These can serve as useful reference points to interpret the forestry law of a given country.

Addressing "Bad" or "Unfair" Laws

Illegality in the timber extraction business is often a symptom of deeper underlying problems. A narrow focus on illegal activities may perpetuate inequities and corrupt resource allocation processes. Forest laws, or decisions made in purported application of the law, often reinforce unfair relationships or disregard customary forest rights. Arguably, such laws need to be reformed before their enforcement can properly serve the public interest.

The following are some examples of laws that may have undesirable results:

The key safeguard against associating with unjust but legal outcomes in a supplying country is to position your company's policy within the broader context of corporate social responsibility. Similarly, efforts to avoid the products of illegal logging should be embedded within a broader goal of promoting sustainable forestry.

Legal compliance is best seen as a factor that contributes to responsible forest management rather than as the end game. The GFTN Responsible Sourcing Guide deals with this by positioning legality as one step along the way toward achieving environmentally sound, socially beneficial and economically viable production and sourcing of forest products.

Another safeguard is to have an explicit policy on disputed or controversial decisions by officials—for example, alleged corrupt or improper allocation of forestry concessions. This would allow for the reality that many developing countries lack effective administrative law mechanisms such as complaints procedures; tribunals to review official decisions; and the allocation of permits, freedom-of-information provisions and independent watchdog institutions such as an ombudsman. Where such systems are weak or absent, aggrieved parties cannot easily challenge official decisions made improperly or at odds with legal requirements. Your sourcing policy could include a proviso, for example, that if your organization is made aware of a significant dispute over the process by which the forest manager secured the permit, it will inquire into the status of the dispute and not regard the forest as a legal source until the dispute is resolved.

Another issue to consider when formulating a policy is that illegal logging problems are greatest in countries where forest governance is poor. In such countries the task of strengthening governance and building local regulatory capacity will take time, even where there is the political will to improve.

In the transition phase, purchasers can contribute significantly to improved governance by awarding contracts to legitimate enterprises that are attempting to do a good job under difficult conditions. This helps keep the 'good' operators engaged. It is a more positive way forward than boycotting all business in the country. Such contracts, however, must encourage constant improvement, and contracts with organizations that fail to take positive steps should not be renewed. The stepwise approach to responsible sourcing advocated by WWF's GFTN allows flexibility for your company, encouraging your business to stay engaged and to drive reform in the places where the problems are greatest.


6.1 Dealing with Unknown and Unwanted Sources

Unwanted Sources

Unwanted Source

Unwanted sources may have a high degree of traceability or be simply unknown. Where the source is identified, the key information is that the source clearly does not comply with the requirements of the organization's policies, and there is no remedy for this situation. Where remedies can be identified, these should be included in action plans developed with the supplier. The progress of these action plans should then be reviewed periodically, and, if improvements are made, the source may be categorized as a limited knowledge of forest source or higher. If improvements are not made, the source remains unwanted.

Unwanted sources can be identified virtually at any stage in the assessment process and a source that was previously regarded as acceptable may on further investigation be regarded as unwanted. This may be through obtaining further information direct from the supplier or through other parties.

Limited knowledge of forest source may not be regarded as unwanted initially, but if the source remains of limited knowledge after SMART targets have been set, it must inevitably become regarded as unwanted and be dealt with accordingly.


2.2 Conducting a Baseline Assessment

Supply Chain Review A preliminary analysis of the organization's current sources of forest products must be undertaken to broadly categorize supplies according to the level of traceability and the environmental status of source forests. This analysis should include an investigation of key suppliers to identify any issues or concerns that will require further investigation. This analysis may form the basis for prioritizing certain supply chains or source countries when the fuller process of assessment commences.

The baseline assessment should match the information-gathering and assessment systems that are discussed in more detail within elements five and six: establishing traceability and determining the environmental status of supplies. This will help ensure that only one system will need to be developed and suppliers will not face a variety of different processes that will lead to confusion.

The baseline assessment is very likely to reveal gaps, sometimes major, in the picture of the supply chain. These gaps are the priority areas for future target setting and activity. The baseline assessment provides a snapshot of the current situation and may reveal large areas where transparency and policy compliance is poor. Without this assessment, it is impossible to identify targets for improvement in the short, medium and long term.

Note for GFTN Participants: Companies that are applicants to the GFTN will routinely be asked to complete a baseline assessment prior to developing their first action plan. A template of a GFTN baseline appraisal is available from your local GFTN manager.




This is an excerpt from WWF’s Global Forest & Trade Network (GFTN) Guide to Responsible Purchasing. All rights reserved. © WWF. The full text can be accessed online at rpg.gftn.panda.org.
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