Print this page

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.


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.


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


Illegal Logging

Implications for Those Buying and Supplying Illegal Timber

Companies that buy products containing illegal timber may do so knowingly or because they have failed to exercise due diligence over their supply chains. Either way, the potential negative consequences of trading in such products include the following:

The global trade in illegally extracted timber is a multibillion dollar industry. Illegal logging occurs when timber is harvested, transported, processed, bought, or sold in violation or circumvention of national or sub-national laws. Although generally portrayed as a problem in tropical forests, illegality also occurs in developed countries and economies in transition.

Negative Impact of Illegal Logging

Illegal logging takes place in many countries on a small scale and has limited impact on the environment or society in general. However, in a significant number of countries, illegal logging is a major problem that poses a serious threat to forests, communities, and wildlife.

The negative impacts of illegal logging include:

Further information within the WWF website on the negative impacts of illegal logging can be found here.

Countries Where Illegal Harvesting Takes Place

Although exact figures are difficult to obtain (given the nature of the activity), recent estimates of the scale of illegal logging in some countries are provided below. Every effort is made to keep this table as up to date as possible, but it is suggested that the www.illegal-logging.info website is used as a starting point to obtain the latest information.

It is worth noting that all of the sources below have employed a variety of methodologies to derive the estimated figures. The most recent data available suggests that there may be some reduction in some countries though this is difficult to assess given the range of methods employed. What is clear is that nearly all of the countries highlighted have, and continue to experience, serious levels of illegal harvesting and illegal trade in their forest products industries and are therefore considered high-risk from the purchasers perspective.

Country sources of illegally harvested timber

Country

American Forest & Paper Association Estimates of “Suspicious” Timber

Other Estimates of Illegal Logging

Source of Other Estimates

Eastern Europe

Russia

15–20% of production
15–30% of exports

25% of exports

25–50% of exports

 

30% of production
(one-third)

 

20–60% of production

World Bank 2005 (1)

 

USDA Foreign Agricultural Service 2005 (2)

House of Commons Environmental Audit Committee (UK) 2006 (3)

IUCN 2005 (4)

 

Estonia

 

50% of production

 

50% of production

Taiga Rescue Network 2005 (5)
Estonian Green Movement 2004 (6).

Latvia

 

20% of production

 

15–20% of production

Taiga Rescue Network 2005 (5)
WWF Latvia 2003 (7).

Africa

Cameroon

30% of production

50–65% of production

25% of all production
(less in export oriented production)

World Bank/WWF Alliance 2002 (8)

Chatham House 2009 (19)

Equatorial Guinea

30% of production

 

 

Gabon

30% of production

 

 

Liberia

30% of production

100% of production

National Transitional Government of Liberia (NTGL) 2005 (9)

Ghana

30% of production

50% of production

The Forestry Commission of Ghana 2003 (10)

Asia Pacific

Vietnam

 

73% of imports from high-risk countries

Chatham House 2009 (19)

Indonesia

60% of production
55% of plywood exports
100% of log exports

80% of production

 

83% of production

40% of harvest

House of Commons Environmental Audit Committee (UK) 2006 (3)

CIFOR 2004 (11)

Chatham House 2009 (19)

Malaysia

5% of production
70% of log imports

 

 

Papua New Guinea

20% of production

65% of log exports

Forest Trends 2006 (12)

China

30% of production
30-32% of export products

50% of production

 

USDA Foreign Agricultural Service 2005 (13)

Latin America

Brazil

15% of production
15% of export products

37% of production

Imazon 2005 (14)

Peru

 

70-90% of production

80%

 

> 90% of exports (mahogany)

ITTO 2002 (15)
The Peruvian Environmental Law Society, 2003 (16)

 

ParksWatch 2005 (17)

Ecuador

 

70% of production

Ecuador's Wood Industry Association 2005 (18)

 

 

 

 

Note: Note that illegal harvesting does not just occur in developing countries. It occurs to a limited extent across Europe and North America. Good regulatory systems that are enforced, however, ensure that it is kept to a minimum.

For more information on illegal logging go to www.illegal-logging.info. The site is maintained by the Energy, Environment and Development Programme of Chatham House in London, with funding from the UK Department for International Development (DFID).

(1) World Bank, 2005, Forest Law Enforcement Governance (FLEG) in Eastern Europe and Northern Asia (ENA-FLEG). p. 8.
(2) USDA Foreign Agricultural Service GAIN Report, 2005, Russian Federation Solid Wood Products Forestry Sector Continues to Struggle 2005. p. 4.
(3) House of Commons Environmental Audit Committee, 2006, Sustainable Timber: Second Report of Session 2004-05. p. 12.
(4) IUCN Global Temperate and Boreal Forest Programme IUCN Office for Russia and the Commonwealth of Independent States, 2005, The Beginning of the ENA FLEG Process in Russia: Civil Society Insights. p. 21.
(5) Taiga Rescue Network, 2005, Sweden: Forest Industry – Giant with Big Timber Footprints in the Baltic Region. p. 2.
(6) Estonian Green Movement, 2004, Illegal forestry and Estonian timber exports. p. 2.
(7) WWF Latvia, 2003, The features of illegal logging and related trade in the Baltic Sea region. p. 5.
(8) World Bank / WWF Alliance, 2002, Forest Law Assessment in Selected African Countries. p. 19.
(9) All logging concessions in Liberia were cancelled in Feb 2006 following a report by the Forest Concession Review Committee - Phase 3, 31 May 2005, which had found that no individual concession holder was able to demonstrate sufficient level of legal compliance. UN Security Council sanctions were re-imposed on Liberian timber exports in December 2005.
(10) The Forestry Commission of Ghana, 2003, Keynote Address by Hon. Prof. Dominic K. Fobi - Minister for Lands & Forestry.
(11) Tacconi L, Obidzinski K, Agung F, 2004. Learning Lessons to Promote Certification and Control Illegal Logging in Indonesia, Report for the WWF/TNC Alliance to Promote Forest Certification and Combat Illegal Logging in Indonesia, Centre for International Forestry Research.
(12) Forest Trends, 2006, Logging, Legality, and Livelihoods in Papua New Guinea: Synthesis of Official Assessments of the Large Scale Logging Industry Volume I.
(13) USDA Foreign Agricultural Service GAIN Report, 2003, People’s Republic of China Solid Wood Products Annual 2003. P. 5.
(14) Figure based on data from IMAZON (Amazon Institute of People and the Environment) and Brazil’s environmental agency Ibama. Imazon, 2005, Human Pressure in the Brazilian Amazon. P. 5.
(15) ITTO, 2002, Achieving the ITTO Objective 2000 and Sustainable Forest Management in Peru – Report of the Diagnostic Mission. P. 4.
(16) The Peruvian Environmental Law Society, 2003, Case Study on the Development and Implementation of Guidelines for the Control of Illegal Logging with a view to Sustainable Forest Management in Peru.
(17) ParksWatch, 2005, An Investigation of Illegal Mahogany Logging in Peru’s Alto Purús National Park and its Surroundings. The report confirmed nearly all of Peru’s exports of Mahogany were illegal.
(18) Office of the United States Trade Representative (USTR), 2005, Interim Environmental Review of the United States-Andean Free Trade Agreement.
(19) Chatham House, 2009, Illegal Logging and Related Trade: 2008 Assessment of the Global Response (Pilot study), Duncan Brack, Sam Lawson & Larry MacFaul.

 

Seneca Creek Associates and Wood Resources International, 2004, “Illegal” Logging and Global Wood Markets: The Competitive Impacts on the U.S. Wood Products Industry.” Prepared for American Forest & Paper Association. Available from www.afandpa.org.


 


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.


6.0 Environmental Status of Supplies

Stepwise Approach

Figure 1

Having established its data-gathering and storing mechanisms, the sourcing organization can now begin to assess the data received. It is likely that the data will be incomplete or difficult to understand, particularly after the first round of data gathering, but subsequent rounds should be able to address these problems (see here for more information).

Each source identified should be placed in one of the following environmental status steps:

The next sections discuss each of these categories in more detail to assist in the process of designation (see also Figure 1). The remainder of this section deals with the criteria and means of assessing whether a source meets an organization's sourcing policy and with categorization for sources that go beyond minimum compliance.


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.


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.


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.


0.0 Introduction

IntroductionSince the Global Forest & Trade Network (GFTN) first published its Guide to Responsible Sourcing of Forest Products and the closely associated Keep It Legal manual as paper documents, there have been numerous developments that resulted in this revision. The main change is the development of these web pages, which are searchable and easier to maintain—allowing the GFTN to continue to offer the best advice available.

These pages contain numerous links to other websites, many of which are external. As such, we are not responsible for the content, but believe these sites to offer greater depth to the understanding of aspects of responsible sourcing of forest products.

There have also been numerous developments within the sphere of legality of forest products. Legislative processes in the US, Europe and Australia and developments within certification and chain of custody have all prompted us to enhance the advice available regarding legality.

The ability to print most sections of these pages and to search a number of key terms is intended to allow you as the user to both take in the overall concepts and easily find what you need on specific topics.

Who Should Use These Pages

These pages are designed for use by a sourcing organization that wishes to develop a due diligence system for the legal and responsible sourcing of forest products. The guide lays out a generic approach for the development and implementation of a responsible sourcing policy, hereafter referred to as a responsible sourcing programme.

The guide is aimed at any medium-size or large enterprise, including primary mills, secondary processors, importers, manufacturers, wholesalers and retailers, which purchase or procure forest products. In appropriate circumstances, it may also serve to guide smaller enterprises.

The guide outlines the various ways in which sourcing organizations can exercise due diligence and demonstrate compliance with best practice based on compliance with their own sourcing policies. It is based on both tried and tested mechanisms and extensive experience in the development of responsible sourcing programmes.

The principles outlined within this guide are in line with the GFTN Participation Rules; and as such, the guide should help GFTN Trade Participants meet their participation requirements. All GFTN Trade Participants are advised to refer also to the specific guidance issued by their local GFTN manager. Where advice is specific to GFTN participants, there are links to relevant documents or additional guidance.

The original paper versions of these two guides are still available as downloads (PDF) and the following pages are printable. Every effort has been made to retain the core information of the previous published documents and changes have only been made where circumstances, processes or legislation has changed.

The implementation of a responsible sourcing programme to demonstrate due diligence is a major undertaking for any organization and requires a high degree of commitment to achieve results. This guide outlines a set of processes and procedures by which a sourcing organization can begin to address the problems that are common to many supply chains.

The first two paper-based versions of this guidance have been widely distributed in a number of languages and are currently used by several hundred companies representing the whole supply chain from the forest floor to the retail store. The guidance has been adopted by companies sourcing products as varied as paper and plywood to sawn timber and furniture. Although designed primarily for companies that are participants in the Global Forest & Trade Network, it has also been welcomed by companies choosing to work outside this network.

Purchasers of pulp and paper based products are advised to also consult WWF’s guidance with respect to these products where further aspects of production, beyond fibre sourcing are addressed. Further information can be found here.


14.2 The Common Legality Framework's Principles & Criteria

The Common Legality Framework encompasses the legal requirements covering the entire supply chain including forestry operations and corresponding processing and timber trade relating to timber origin, production, transportation, processing and trade, and legislation safeguarding agreed standards in relation to environmental, conservation and social issues. This includes national laws, rules, regulations and administrative circulars, including contractual obligations that cover these areas. Legislation and regulations outside these areas are not included in the Framework.

The Framework is composed of a set of principles, each supported by one or more criteria. When developed for use within a national context the criteria are further supported by nationally appropriate indicators and guidance notes/verifiers – specific to that country – based on the existing legislative base, that are practical, easily implemented on the ground and readily audited. The format of principles, criteria and (national) indicators is a format widely used within forest certification and already accepted by civil society, industry and government.

The Framework comprises nine broad legal Principles. Africa includes a 10th Principle specific to their needs after multistakeholder consultations there. These Principles are the fundamental aspects to be addressed in all cases. Each Criterion represents an important aspect which allows the assessment of a legal Principle. Local indicators, verifiers and guidance have to be developed to allow use of the Framework within a national context and these will vary between countries relative to the legislation in force.

The Common Legality Framework’s Principles and Criteria

Principle 1

Access, Use Rights and Tenure

Criterion 1.1

The company is legally registered with the relevant administrative authorities

Criterion 1.2

Use, access and tenure rights applications are subject to stated pre-conditions within the laws and regulations

Criterion 1.3

Clear evidence of forest and/or land use, access and tenure rights shall be demonstrated in accordance with laws and regulations

Criterion 1.4

Use, access and tenure rights are subject to stated conditions within the laws and regulations

Principle 2

Harvesting Regulations

Criterion 2.1

Forest Management Plan in accordance with the government policies, guidelines and regulatory requirements, approved by relevant authority

Criterion 2.2

Harvesting/timber licence with stated conditions in accordance with the government policies, guidelines and regulatory requirements, approved by relevant authority

Criterion 2.3

The company implements harvest operations in accordance with the legally prescribed silvicultural system and relevant regulations

Principle 3

Transportation of Logs and Wood Products

Criterion 3.1

Clear evidence of documents and licences for companies and carriers involved in timber products transportation shall be demonstrated in accordance with the laws and regulations.

Criterion 3.2

Clear evidence of documents and corresponding markings of timber products for transport shall be demonstrated by companies and carriers in accordance with the laws and regulations

Principle 4

Processing Regulations

Criterion 4.1

Clear evidence of documents and licences for companies involved in timber processing shall be demonstrated in accordance with the laws and regulations

Criterion 4.2

Timber processing companies are subject to stated conditions within the laws and regulations

Principle 5

 Import and Export Regulations

Criterion 5.1

Clear evidence of licence/permit of company involved in import and export shall be demonstrated in accordance with the laws and regulations

Criterion 5.2

Clear evidence of official documents of timber products for import and export shall be demonstrated by companies and carriers in accordance with the laws and regulations

Criterion 5.3

Timber products import and export companies are subject to stated conditions within the laws and regulations

Principle 6

 Environmental Regulations

Criterion 6.1

State/company conducts environmental impact assessments or other required assessments within the laws and regulations

Criterion 6.2

State/company takes mitigation measures on negative environmental parameters in accordance with the laws and regulations

Principle 7

 Conservation Regulations

Criterion 7.1

State/company conducts conservation assessment/evaluation within the laws and regulations

Criterion 7.2

State/company takes mitigation measures on negative conservation values in accordance with the laws and regulations

Principle 8

 Social Regulations

Criterion 8.1

Company maintains or strengthens socio-economic welfare of local communities/indigenous people in accordance with the laws and regulations

Criterion 8.2

Company recognizes legal or customary rights of indigenous/local people in accordance with the laws and regulations

Criterion 8.3

Company complies with the laws and regulations on its employees’ and workers’ rights

Criterion 8.4

Company complies with the laws and regulations of its employees’ and workers’ welfare

Principle 9

 Taxes, Fees and Royalties

Criterion 9.1

The company fills in its tax returns in accordance with its effective professional activity

Criterion 9.2

Clear evidence of current paid taxes, fees and royalties in a timely manner shall be demonstrated by the company in accordance with the laws and regulations

Principle 10 is specific to Africa where stakeholders considered the issues related to subcontractors and partners to be important and upgraded this to a separate Principle. In Asia it was retained at the criteria level as an integral part of other principles.

Principle 10

 Subcontractors and Partners

Criterion 10.1

The company respects the contracts made with subcontractors and partners

Criterion 10.2

The company ensures that all subcontractors and partners are operating within the law


Conflict Timber

“Conflict timber” is a term used to describe timber that is produced and sold to finance armed conflict. The definition used by the NGO Global Witness is “timber that has been traded at some point in the chain of custody by armed groups, be they rebel factions, regular soldiers, or the civilian administration, either to perpetuate conflict or to take advantage of conflict situations for personal gain”.

Conflict timber is not necessarily illegal, though this will depend on governmental sanctions that may be in place at any given time.

Conflict Timber—Relevance for Responsible Purchasers

Individual organisations need to be aware of the existence of conflict timber and should be prepared to adjust their purchasing policy accordingly. Where research or stakeholder interaction suggests that such timber may be present in the supply chain, it is recommended that the purchasing policy be reviewed and as necessary enforced to remove the source from the chain. NGOs and other stakeholders may be able to assist in identifying sources of conflict timber; the UN also may have information, for example, in the form of embargoes or other dialogue that may assist in identifying such sources.

Countries that have regional variations (i.e., the conflict is regional) need to use an extremely clear and detailed chain of custody to ensure that the supply chain involved is not associated with the region in conflict. The complicated nature of conflicts may undermine this process and not satisfy stakeholders that the issues can be sufficiently separated.

More information on conflict timber can be found here –

Global Witness www.globalwitness.org


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


High Conservation Value Forests (HCVFs)

HCVFs may be defined as one or more of the following:

Although in many cases it is not illegal to source forest products from an HCVF, in the context of responsible purchasing, such sourcing should be discouraged. Exceptions include where:

There is no definitive list of HCVFs, and it is accepted that it is difficult for purchasing organizations to assess whether or not forest products originate in such forests.

The HCV Resource Network has been established by a group of organisations who use the HCV approach, including environmental and social NGOs, international development agencies, timber and forest product certifiers, suppliers and buyers and forest managers. The Network aims to encourage collaboration, provide information and support on the evolving usage of HCV and ensure that a consistent approach to HCV is understood and applied throughout the world.

For practical purposes, purchasing organizations are advised to discuss the latest information regarding HCVFs with WWF and other environmental organizations working in this field. One approach would be to highlight key areas and regions in which it would be inappropriate to harvest forest products. A more positive approach, generally encouraged by WWF, would be to engage with the producer to assess the high conservation values demonstrated within a forest area and to manage the forest appropriately within the context of credible forest certification.

A developing resource for companies is the FSC Global Forestry Risk Registry. The Registry is a free tool providing information about the risk of sourcing controversial wood and other forest products from over 150 countries. The tool is currently under development by NEPCon, in cooperation with the FSC and the Rainforest Alliance. It is targeted towards companies wishing to conduct due diligence on the risks of sourcing raw material from forests and forest products operations in various countries.  


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.


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:


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.


14.4 National Legality Frameworks

The following National Legality Frameworks were developed by compiling all available documents constituting the legal framework for the forestry sector in each of the countries and conducting 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, legal experts, NGOs and donors.

Please Note: The designations of geographical entities in this publication, and the presentation of the material, do not imply the expression of any opinion whatsoever on the part of WWF, TRAFFIC or its supporting organizations concerning the legal status of any country, territory, or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries.

The views of the authors expressed in this publication do not necessarily reflect those of the TRAFFIC network, WWF or IUCN. 


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


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.


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)


CITES-Listed Species

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is a global response to concern over the trade of endangered species. CITES was enacted in 1975, and 160 countries have ratified the treaty. CITES regulates the trade in live animals, animal parts, ornamental plants, medicinal plant parts, and timber species. It seeks to identify threatened species and create increasingly strong legal barriers to their harvest and trade, depending on their conservation status (see also www.cites.org).

CITES lists threatened or endangered wood species under three classifications, known as the Appendices. The restrictions on trade within these appendices vary depending on the extent to which the species is threatened with extinction. The CITES listing includes species that are traded for timber, traded for medicinal purposes, and rare but not commercially traded.

More Information on CITES Timber Species

The following websites contain valuable and regularly updated information on CITES listed species.
WCMC Web site (www.unep-wcmc.org)
IUCN Web site (www.iucnredlist.org)
United States department of Agriculture

CITES Listing - Relevance for Responsible Purchasers

CITES Appendix I-listed species should be avoided at all times.

For Appendix II and III species, a high degree of caution must be exercised. First, there is a legal obligation on any importer and trader in these species that ensures that all imports and trades are registered with the relevant authorities. Penalties are often large for failure to register imports of Appendix II and III species.

The second question concerns the endangered nature of these species. Trade in these species may be legal, but it is important to recognise that, in many cases, it is trade that has led to the need and requirement for close monitoring. CITES-listed species are subject to being removed from trade (through removal to Appendix I or through a reduction in quotas), so in many cases there is no guarantee of the long-term availability of species on Appendices II and III.

Best practice with CITES species is to closely monitor the status of the species involved and ensure that all legislative requirements are met. Be 100 per cent certain of which species is being purchased.


8.6 Choosing the Appropriate Status for a Source

Choosing the Appropriate Status for Your Source

The more an organization digs into the issues, the more information will come to light that may have a bearing on the status of the source. Sufficient information may be available at the initial baseline investigation to determine if a source is to be given the status “Unwanted”. Further rounds of information gathering may affect the status of a source previously categorized as “Limited knowledge” or “source assessed,” which will force a re-evaluation and perhaps a downgrading to “Unwanted”. In most cases, the process of gathering information, analyzing it and seeking clarification will take some time. However, it is important to make sure that this process does not become a method to delay making a decision on the future of the supplier and continue business as usual. It is therefore essential to set appropriate deadlines, agree on these with the supplier and clearly identify what will happen at that point.

The table below can be used as a checklist to identify whether a source is assessed, verified, unwanted or there is limited knowledge. It is also a useful checklist for compliance against the FSC Controlled Wood Standard.

Using information on an individual source plus information on the supplier of the material, work through the table to identify the most appropriate status. The table refers in some cases to “an agreed upon period” which is the period of time defined by the buyer and accepted by the supplier to meet this condition.

 

Policy Criteria

Limited knowledge of forest
Source

Unwanted
Source


Source Assessed

Source Verified

Legality:
The supplier knows where the timber was grown and can identify the harvesting entity.
The timber originates from an entity that has a legal right to harvest timber in the forest management unit where the timber was grown, and has been legally traded.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed upon period:
The supplier cannot identify that the harvesting entity has a legal right to harvest (has a harvesting permit and authorization from the resource owner).


The supplier identifies the harvesting entity and that the harvesting entity has a legal right to harvest and timber has been legally traded.

Same as source assessed

High Conservation Value Forest (HCVF):
Regarding whether the timber is harvested from forest areas where forest management activities maintain or enhance high conservation values.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed-to period:

If HCVs are only suspected or are not evaluated—
No special management to maintain or enhance is adopted for high conservation values.

If HCVs are identified—
(a) lack of willingness to recognize values, assess values, or engage in any form of HCV forest management; and/or (b) lack of willingness to adopt a precautionary principle for HCVs.

If HCVs are only suspected or are not evaluated—the precautionary approach shall be adopted and no timber shall be supplied until the presence of high conservation values (HCVs) has been credibly assessed and appropriate management (to maintain or enhance) can be planned accordingly.

 If HCVs are identified, evidence is provided that
(a) the forest is certified, or in progress to certification (and a comprehensive HCV forest assessment has been done and an action plan developed to ensure the maintenance and enhancement of the identified HCVs,
OR
(b) the forest manager can otherwise demonstrate that the forest and/or surrounding landscape is managed to ensure those values are maintained (usually this will involve a comprehensive HCV forest assessment in the site/landscape and a commitment to management actions and monitoring to ensure the HCVs are maintained and enhanced).

More information on HCVF here.

Unjustified Forest Conversion:
Regarding whether the known source is a forest that is being inappropriately cleared or converted, and/or timber that has been harvested from areas that have been converted from natural forest to plantations or nonforest uses.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed-to period:

No evidence is provided that

  • a transparent multi-stakeholder planning process has been conducted;
  • there are no outstanding conflicts with local and indigenous peoples regarding the clearance;
  • where the forest is classified or suspected as being of high conservation value these values are being maintained or enhanced;
  • an environmental impact study has been conducted and its recommendations implemented.
 

 Evidence is provided that

  • a transparent multi-stakeholder planning process has been conducted;
  • there are no outstanding conflicts with local and indigenous peoples regarding the clearance;
  • the forest is classified or suspected of being of high conservation value and these values are maintained or enhanced;
  • an environmental impact study has been conducted and its recommendations implemented.

More information on forest conversion:
http://assets.panda.org/downloads/ wwf_position_paper_on_forest_conversion.pdf

Conflict Timber:
Regarding whether the timber was traded in a way that drives violent armed conflict or threatens national or regional stability.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed-to period:

The source is clearly or strongly suspected of, originating from a country or operation that is not acceptable according to the sourcing policy.

 

Clear evidence is provided that the source is not listed as unwanted according to the sourcing policy.

More information on conflict timber here

Human Rights Issues: Regarding whether the harvesting or processing entity, is violating human rights.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

Internal and external stakeholder concerns
identify specific issues, countries,
or companies that are extremely controversial
or out of step with generally
accepted practices.

 

Internal and external stakeholder concerns
identify specific issues, countries, or companies that are extremely controversial or out of step with generally accepted practices.

More information on human rights issues here.

Endangered Species:
Regarding whether the tree species involved is listed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) (or other schedules, as defined by the responsible purchaser’s policy) where trade is prohibited, or is listed in CITES Appendices II or III but the supporting certificates from the CITES management and scientific authorities in the country of origin are valid.

The supplier cannot identify the species of timber supplied or where it was grown and cannot identify the harvesting entity.

After an agreed-to period:

Species is identified as CITES Appendix I.

CITES Appendix II or III trade (where permitted under the sourcing policy) is not backed by all relevant export and import documentation as required by relevant CITES management authorities.

CITES species that lack required documents can be consider “illegally traded” and thus should be regarded as unwanted under the “Legality” criterion.

CITES Appendix II or III trade (where permitted under the sourcing policy) is backed by all relevant export and import documentation as required by relevant CITES management authorities covering both export and import.

More information on CITES here.

Same as source assessed.

Genetic Modification (GM):
Regarding whether the known source is from a forest that does not use GM trees.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed-to period:

Evidence or a statement that the forest management enterprise does supply timber from GM trees.

 

Evidence or a statement is provided that the forest management enterprise does not supply timber from GM trees.

Local Conflicts:
Regarding whether the known source is a forest where there is no unresolved conflict concerning local or indigenous people or civil society groups.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed to period:

Absence of a process for conflict resolution
and absence of clear evidence that
demonstrates that a process has been developed.

 

 Clear evidence is provided that demonstrates
that a process for the resolution of the conflict
has been, or is being developed:
(a) identification of all local communities or traditional
and indigenous peoples in the forest management unit and adjacent area;
(b) documentation showing the forest management unit’s ownership or legal right to harvest;
(c) documentation recording traditional rights as identified by the communities and peoples
groups identified in (a);
(d) documented evidence of consultation with local communities or traditional and indigenous
peoples groups identified in (a);
(e) documented evidence of the process by which any disputes are being resolved, which has the broad support of the parties to the dispute, and which outlines an agreed-to interim process for addressing the dispute and for the management of the forest area concerned.

Documented evidence of any payments to local communities or traditional and indigenous peoples groups are fair, and obtained a Free, Prior and informed (FPIC) consent.

Traceability Issues:
Regarding the data supplied and its completeness.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed-to period:

The supplier has not returned the questionnaire or has failed to complete it sufficiently within the specified time.

Product is traceable to the forest management unit to a degree of precision that is commensurate with the risk that the source may be unwanted. More information on data issues and suppliers here.

A 3rd party has verified that the material does not contain unwanted sources.

Information Disclosure Issues:
Regarding confidentiality or willingness to disclose the source.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed-to period:

The supplier will not disclose the source (forest) of the forest product within the specified time.

Product is traceable to the forest management unit to a degree of precision that is commensurate with the risk that the source may be unwanted sourcing

More information on data issues and suppliers here.

 A 3rd party has verified that the material does not contain unwanted sources.

Integrity issues:
Regarding the integrity of the supplier and supplier data.

The supplier cannot identify where the timber was grown and cannot identify the harvesting entity.

After an agreed-to period:

Other sources of information continue to dispute the information provided by the supplier, and the supplier is unable to sufficiently refute these allegations to the sourcing organization’s satisfaction.

Product is traceable to the forest management unit to a degree of precision that is commensurate with the risk that the source may be unwanted sourcing

More information on data issues and suppliers here.

A 3rd party has verified that the material does not contain unwanted sources.”


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.


4.0 Communications

CommunicationsKey Points - Communications


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.

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).


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.


14.1 Introduction

The overall aim for the Common Legality Framework is to support companies and where relevant, regulators in their efforts to improve governance of their forest resources and prevent illegal logging and timber trade through encouraging compliance with laws related to the forest sector at the national and international level. By providing information on a forest-focused sub-set of applicable laws and regulations in a clear and accessible manner, this legality framework can help both regulators and companies—particularly GFTN members in countries of export and import—to verify that timber and other forest products contribute to sustainable forest management.

A further aim is to support the development of a more consistent and common approach to considering legality of forest operations, timber processing and trade that would be broadly applicable across countries. This approach is considered important in order to reduce the potential confusion among industry and governments that could result from the proliferation of different legality frameworks.

In Africa, the Framework supports the work of the Commission des Forets D’Afrique Centrale (COMIFAC) in the Congo basin. In particular, the framework supports COMIFAC’s Plan de Convergence, including sustainable use and management of forest resources, certification, traceability systems and national plans against illegal use of forest resources.

The Framework will also directly support implementation of the EC Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT) to: promote equitable and just solutions to the illegal logging problem that do not have an adverse effect on poor people; help partner countries to build systems to verify timber has been harvested legally; promoting transparency of information; promote policy reform; and build the capacity of civil society and partner country governments.


10.0 Environmental Status of Supplies - Credibly Certified Source

Credibly Certified Source

The term "credibly certified forest product" refers to timber originating in forests that have been independently assessed and certified as being well managed; that is, they are managed in an environmentally responsible, socially beneficial, and economically viable manner. The independent certification process requires that standard setting, accreditation and auditing all be performed by different independent bodies. Forest certification inspections or audits are carried out by third party certification bodies. These certifiers in turn are accredited by an independent accreditation body. The forest audits must be site-specific and should assess management at the level of the forest management unit against measurable, recognized performance standards. These standards must include minimum thresholds for economic, social, and environmental criteria.

Final customers (purchasers of goods not for resale/consumers) seek assurance in the form of a chain-of-custody certificate that the timber products they are sourcing are from credibly certified forests. This form of certification requires that businesses that handle certified forest timber demonstrate that their certified timber and raw materials are produced under a credible chain-of custody system. Chain-of-custody certification can be coupled with a logo or label that can be used, where desirable, to identify timber from well-managed and certified forest operations. Independent forest certification and the associated market in certified forest products are both market-driven and stakeholder driven processes.

What Does Credibly Certified Mean?

Criteria

Requirements

Credible Forest Certification Systems

Forest certification aims to provide reliable information for end users and consumers of forest products, assuring them that the forests from which the timber originated are managed according to high environmental, social and economic standards. Over the last decade, various forest certification systems have developed to meet the requirements of different stakeholders.

To meet WWF’s basic requirements for a credible forest certification system, the system must:


Using the above criteria, WWF developed a tool called the Forest Certification Assessment Tool (CAT), which will continue to be used to assess a range of schemes and define an appropriate level of acceptability. Within the multi-scheme environment that exists today, WWF and the GFTN will support all schemes that reach a level of credibility as defined by the Guide or any future tools developed.

Recent assessments show that the Forest Stewardship Council (FSC) certification system best meets WWF’s key requirements as described by CAT. Thus, while WWF acknowledges that several schemes may contribute to improved forest management, WWF will continue to use the FSC as the internationally recognized hallmark of responsible forest management.

The sourcing organization is urged to monitor developments in credible certification wherever possible to engage in debate, trials and discussions that will raise the level of understanding and long-term improvements in the credibility of schemes, leading to improved forest management practices.

Checking Whether a Source is Credibly Certified

The organization should ensure that it obtains a chain-of-custody certificate that is relevant to the timber or materials supplied. The authenticity or scope of the certificate can be checked either at the FSC website or, in some cases, at the website of the certification body.

More information regarding credible forest certification and WWF’s support can be found here.


3.1 Where to Start

Responsible Sourcing Policy DevelopmentThere is no right, wrong or perfect set of policies to underpin the effort to achieve more responsible sourcing of forest products. However, it is important that the policy be aligned with SMART targets (these types of targets are discussed later).

It is also important that policy makers consider the consequences of their policy prior to its implementation. Strong policies, for example, may have a financial cost that renders them unsustainable; and weak policies may attract criticism from stakeholder groups. Therefore, a workable balance must be struck. It is important for the values of stakeholders to be reflected within the policies developed.




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.
Print this page