European Union Due Diligence
In July 2010, the European Parliament approved legislation which prohibits the import, trade and sale of timber illegally taken in the country of origin. In addition, companies must use a system of 'due diligence' to ascertain that the timber they sell in the European Union (EU) was harvested legally. The European Council has already agreed to support the legislation and is expected to formally adopt it in September 2010. The new EU legislation will come into force during 2012.
The newly agreed legislation is intended to work alongside the EU's Action Plan on Forest Law Enforcement, Governance and Trade (FLEGT) licensing system, which identifies legal timber and timber products in producer countries and licenses them for import to the EU. This system is being developed through the negotiation of a series of voluntary partnership agreements (VPAs) with cooperating producer countries. For a variety of reasons, some countries which export timber to the EU will not join the proposed VPAs, at least in the immediate future.
The Rainforest Alliance and NEPCon have developed two comprehensive standards for verification of legal origin and legal compliance, as well as procedures for the independent, third-party verification of wood legality. Through the SmartWood program, we are helping forest products companies ensure that the timber they purchase comes from verifiable, legal sources and that timber harvesting complies with relevant laws and regulations related to forestry. Our SmartSource program offers Legality Assessment and Monitoring services to help companies map their supply chain to analyze and assess risks with the supply chain, establish a program to review risks and monitor progress as required by the EU Due Diligence Regulation.
The Rainforest Alliance VLC standard has been developed with the aim of meeting EU Due Diligence requirements and a this point in time we have received recognition of the standard from the Dutch Keurhout, the Danish Forest an Nature Agency has recently recognized the Rainforest Alliance/NEPCon VLC as recommended for documenting legality for public purchasing. The UK Central Point of Expertise for Timber procurement (CPET) has also recognized the Rainforest Alliance’s standards for Verification of Legal Compliance (VLC).
The EU Due Diligence regulation prohibits the import, trade and sale of timber illegally taken in the country of origin and require any operator placing timber or timber products on the EU market for the first time to implement a due diligence system to minimize the risk of illegal timber to enter the EU market. The full text of the regulation can be seen on the EU website.
The regulation contains an annex with description of the products covered. In terms of origin, both imported and domestically-produced timber and timber products are covered. The proposal establishes the due diligence obligation for operators who are the first to place timber and timber products on the EU market. This essentially covers importers of timber and timber products and primary producers of timber in Europe.
The Regulation will apply to all operators placing timber or timber products on the EU market. “Placing on the market" means the supply by any means, irrespective of the selling technique used, of timber or timber products for the first time on the EU market.
The regulation recognizes two possible routes to the implementation of a due diligence system:
- Operators can design and implement their own system.
- Operators can use a recognized ‘Monitoring Organization’ to provide and monitor the system.
In the context of the EU Regulation, due diligence entails the obligation on the part of the operator (trader, importer) to seek reasonable assurance of the legality of the timber and timber products that he/she buys and sells and the specific process to underpin due diligence. Traders shall demonstrate the exercise of due diligence on the basis of a system of procedures and measures which will enable legality to be reasonably assured.
Under the new regulation Operators are required to follow these obligations:
- The placing on the market of illegally harvested timber or timber products shall be prohibited.
- Operators shall exercise due diligence when placing timber or timber products on the market. To that end, they shall use a framework of procedures and measures, hereinafter referred to as a "due diligence system".
- Each operator shall maintain and regularly evaluate the due diligence system which it uses, except where the operator makes use of a due diligence system established by a Monitoring Organization
The due diligence system which each operator is required to implement includes several elements:
Measures and procedures providing access to the following information concerning the operator's supply of timber or timber products placed on the market:
- description, including the trade name and type of product as well as the common name of tree species and, where applicable, its full scientific name;
country of harvest, and where applicable:
- sub-national region where the timber was harvested; and
- concession of harvest.
- quantity (expressed in volume, weight or number of units);
- name and address of the supplier to the operator;
- name and address of the internal trader to whom the timber and timber products have been supplied; and
- documents or other information indicating compliance of those timber and timber products with the applicable legislation.
Risk assessment procedures enabling the operator to analyze and evaluate the risk of illegally harvested timber or timber products derived from such timber being placed on the market.
- assurance of compliance with applicable legislation, which may include certification or other third-party-verified schemes which cover compliance with applicable legislation;
- prevalence of illegal harvesting of specific tree species;
- prevalence of illegal harvesting or practices in the country of harvest and/or sub-national region where the timber was harvested, including consideration of the prevalence of armed conflict;
- sanctions imposed by the UN Security Council or the Council of the European Union on timber imports or exports; and
- complexity of the supply chain of timber products.
- Except where the risk identified in course of the risk assessment procedures referred to in point (2) is negligible, risk mitigation procedures which consist of a set of measures and procedures that are adequate and proportionate to minimize effectively that risk and which may include requiring additional information or documents and/or requiring third party verification.