Illegal logging is a global issue with important environmental, economic and social impacts. According to a 2012 UNEP / Interpol report, anywhere from 15% all the way up to a third of global forest production potentially originates from illegal sources – at a value of close to $100bn (£60bn).

Illegal logging drives deforestation, damages ecosystems and limits attempts to lower global emissions. Beyond the environmental impact, illegal logging undermines the rule of law, drives corruption and can harm traditional forest-dwelling communities.

We also see a loss of legitimate government revenues and organisations such as Global Witness and the UNEP have both found the often lucrative revenues from illegal logging acting as a major driver of armed conflict such as in Liberia or the Democratic Republic of Congo. Clearly businesses with forest products in their supply chains have an environmental, economic and ethical obligation to do their part in cutting illegal logging through proper and effective supply chain controls.

Many private-sector initiatives are already underway and within the pulp and paper sector in particular, we’ve seen a major boom in demand for third-party sustainable forest manament certification schemes such as through the Programme for the Endorsement of Forest Certification (PEFC) or the Forest Stewardship Council (FSC). However, with only 8% of the world’s forests currently certified , despite both certification organisations working to expand their scope, there is a clear limit to what the private sector can achieve by itself.

This has driven the emergence of regulation-led approaches such as the European Union Timber Regulation (EUTR) and the US Lacey Act, as regulators realise that one of the most effective methods of cutting the supply of illegal logging is to eradicate demand, especially important as according to the WWF, prior to implementation of the EUTR between 16-19% of European timber imports were from illegal or suspicious sources. The EUTR helps to cut this demand by making European businesses directly responsible for undertaking rigorous due diligence on the legality of their timber supply chains.

The focus of the EUTR is on any business that places a timber product on the EU market for the first time. This business is known in the EUTR lexicon as “the operator”. Operators can include a range of businesses – from dedicated timber wholesalers all the way through to major multinationals that source furniture directly – these businesses have a legal responsibility to demonstrate that the timber products they are sourcing are of legal origin.

Following implementation in March of this year, the EUTR is becoming of ever-increasing significance as member-state competent authorities for the EUTR, such as the UK’s National Measurement Office switch approach from education to enforcement. This shift is already bringing results with the timber trades journal reporting in November that one German “operator” is already facing the loss of €100,000 of timber plus fines in relation to an alleged EUTR breach.

As noted at the time, the fine demonstrates that the EUTR has “teeth” although ultimately it’s the “potentially fatal” reputational damage from being shown to be complicit in illegal logging that’s the real threat to business – as perhaps aptly demonstrated by a current campaign run by the Rainforest Action Network against illegal logging in the Russian Far East.

We’ve seen the EUTR driving an increased awareness amongst European businesses about the importance of supply chain controls and transparency, but what about in countries vulnerable to illegal logging? Here, much as the EU has used the spectre of enforcement to create change amongst European businesses, the prospect of fair and free market access is driving change amongst timber producing nations. Regulations such as the EUTR have driven major changes in timber-producing nations as they develop the legality systems required to comply and compete.

Indonesia, for example, has matched the requirements of the EUTR with its own timber legality assurance system – SVLK. The EU and Indonesia are now in the process of ratifying a Voluntary Partnership Agreement, which once activated will mean that European importers will be able to label their Indonesian products ‘FLEGT-licensed’ and to trade with Indonesia in full confidence that they are meeting the EU’s strict due diligence standards.

This will give Indonesia a major trade advantage. Activation of the VPA will happen when both the EU and the Government of Indonesia agree that the SVLK system has been sufficiently implemented for the relevant exporters.

Of course, the EUTR and other emerging legality regulations are not the only drivers of change in the world’s forests. More generally, we’re hopefully witnessing the emergence of better global stewardship of forest resources. For example, at Asia Pulp & Paper Group (APP), almost a year in the implementation, we now contribute to this trend with our Forest Conservation Policy.

We’ve already seen this trend developing in other sectors, with the major palm oil business, Wilmar International adopting a no deforestation policy earlier this month. Uniting these themes is globalisation. Globalisation has brought with it global demands for high standards and the global influence of major international stakeholders and ultimately it is this pressure that is driving change in the world’s forests.

What then can responsible businesses do to keep up the pressure on illegal logging? The answer is to invest more in the wider supply chain, invest more in the audit systems that enable a responsible business to track its impacts and fundamentally, be prepared to switch to those responsible suppliers that can demonstrate legality within their own supply chains. As many of the world’s leading brands have found, there’s a significant advantage to trading and sourcing ethically and sustainability, not least in commercial terms. It’s now time that we focus our efforts on tackling illegal logging.

Aida Greenbury, Managing Director Sustainability, Asia Pulp & Paper Group (APP)

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