The EU Timber Regulation requires you to minimise the risk of selling timber products that were harvested or traded in contravention of the laws in the country of harvest. An efficient way to ensure that you meet these requirements is to use material that has been certified as coming from well-managed forests by, for example, FSC or PEFC. We believe that using certified material can act as one of the most important risk mitigation measures in a due diligence system.
However, it also has to be underlined that certified material cannot be assumed to automatically meet EUTR requirements. You still have to conduct due diligence to ensure the material was legally harvested and traded in the country of origin.
What does the EU Timber Regulation say about certified material?
The European Timber Regulation does not include an automatic “green lane” for certified products, but it does recognise the value of certification as a tool for risk assessment and mitigation.
The European Commission says that companies “may rate credibly certified products as having negligible risk of being illegal, i.e. suitable for placing on the market with no further risk mitigation measures, provided that the rest of the information gathered and the replies to the risk assessment questions do not contradict such a conclusion.”
The Commission has set down some guidance on what they mean by this. They say that a certification system must:
- Include relevant applicable legislation in the scope of the certification.
- Make the system public and available for third parties.
- Require companies to be audited by a third party (including field visits) at least every 12 months.
- Include a chain of custody system to trace legal timber along the supply chain and to exclude illegal timber and timber of unknown legality from the supply chain.
- Require the chain of custody method to be audited by a third party.
In addition, the Commission also suggests some additional ways to assess the credibility of a certification system:
- Is the certification system compliant with international or European standards, such as the relevant ISO standard or the ISEAL Codes of Good Practice?
- Are there substantiated reports about problems with the certification system in the specific countries from which you are importing timber?
- Is the certification system audited by organisations that are independent and accredited?
Why you cannot assume that certified timber meets due diligence obligations
Timber that is certified as being sustainable should of course also be legal. The world’s leading certification systems for responsible forestry, FSC and PEFC, both include requirements of legality in their standards. Moreover, FSC and PEFC certification are accepted as proof of legality under several European national public procurement policies.
However, while the certification systems state that certified timber can be assumed to be legal , you cannot wholly rely on this in terms of your EUTR due diligence obligation because:
- The EU Timber Regulation’s due diligence requirements can include issues that are not covered by the certification system. Certification systems may include different definitions of what legal timber means and thus verify different types of legal requirements, whereas the EUTR defines legal as timber harvested in accordance with laws applicable to harvesting, trade and customs in the country of harvest. This issue has received a lot of attention and several certification systems have updated their requirements recently to try to address gaps . Nevertheless, some gaps remain.
- You need to mitigate the risk that material from non-certified sources has been mixed into your certified supply chain, either knowingly or unknowingly.
- You need to check that the company you are buying from, and the certified material you are buying have been genuinely certified and haven’t, for example, been fraudulently included as certified.
We cover each of these areas in the sections below.
How to assess whether a certification system meets EUTR requirements
We have used the requirements for certified material set out by the European Commission (see box above) to develop a checklist that can be used to assess how well a certification system meet the requirements of European law.
NOTE: The checklist is NEPCon’s interpretation of what a certification system would need to contain to best align with the EU Timber Regulation – it is not a definitive list of requirements or an endorsement of any certification system to provide “EUTR compliance”.
Legality – legal right to harvest
- Include a definition of applicable legislation related to harvesting, trade and transport.
- Specify the laws that need to be complied with in order for harvesting of timber to be considered legal.
- Require compliance with legislation on:
- Land tenure rights, including customary rights and management rights.
- Business registration and tax registration.
- Concession licenses.
- Management planning, including conducting forest inventories and getting a management plan approved.
- Harvest permits.
Legality – taxes and fees
- Require compliance with legislation related to the payment of:
- Harvesting fees.
- VAT and other sales taxes.
- Require fees to be paid based on a correct classification of quantities, qualities and species.
Legality – timber harvesting activities and regulations
- Require compliance with legislation related to timber harvesting activities, including
- Harvesting techniques.
- Protected sites and species.
- Environmental Impact Assessments.
- Health and safety regulations.
- Employment laws.
- Conversion of natural forest to other land uses.
- Legality – third parties’ rights: Require companies to seek free, prior and informed consent.
- Require companies to respect customary, traditional and indigenous peoples’ rights.
Legality – trade and transport
- Require compliance with legislation related to trade and transport, including on:
- Classification of species, quantities and qualities.
- Trading and transport documentation.
- Offshore trading and transfer pricing.
- Customs regulations.
- CITES permits.
- System requirements
- Require certified organisations to have systems and procedures in place that enable them to meet all of the system’s requirements, including:
- Ensuring consistency if 1st or 2nd party assessments are allowed.
- Requiring the system itself to be evaluated and revised regularly.
- Requiring risks to be re-assessed and re-mitigated if the risk changes.
- Make the standards and requirements for certified organisations publicly and freely available. Note that if the system has been developed in conformance with the relevant ISO-guides or ISEAL codes, then it will meet this requirement.
- Require audits of companies to:
- Be carried out at least once a year.
- Include field visits.
- Include an audit of applicable legislation.
How to mitigate the risk that material from non-certified sources has been mixed into your certified supply chain
As well as checking which aspects of the certification system you are using meet the requirements of the EU Timber Regulation, you also need to check whether the certification system adequately minimises the risk that illegal or unknown timber gets mixed in with your certified timber.
For a certification system to adequately do this, it should:
- Ensure that illegal material or material of unknown origin is not mixed in with certified material, either by:
- using a chain of custody system to track timber along the supply chain
- using a risk-based system to ensure that the risks of mixing certified material with illegal or unknown material are low.
- Ensure that the volumes of material transferred along the supply chain are verified.
- Ensure that the country of origin of the material is identified.
- Ensure that the species of the material is identified (with common name and scientific name).
How to check whether a certification certificate is valid
In addition to assuring yourself that a certification system contains the elements required by the EUTR (as described above), it is important to check that your certified material is covered by a certificate that is authentic and valid.
The presence of a certification logo on your supplier's website or a certificate number of your invoice does not necessarily prove that you are buying legitimate certified material.
To do this, you need to:
- Check that the certificate is authentic.
- Check that the certificate is valid.
- Check that the certificate was issued to the company that you are buying from.
- Check that the certificate covers the products you are buying.
- Check that the claim information on the invoice is correct and refers to an active certificate.
In the case of FSC material, you can:
- Check that the certificate is authentic by:
- Finding the ‘certificate code’ on the delivery note or invoice. The format should be as follows: TT-COC-123456, BV-COC-233545 or SGS-COC-122445.
- Entering the certificate code at https://info.fsc.org/certificate.php
- Check that the certificate you have is valid and has not expired or been suspended. Valid certificates are listed as being such in the ‘certificate status’ column on the search results page.
- Check that the certificate you have was issued to the company that you are buying from by clicking on the certificate and checking that the name and address on the certificate matches your supplier's name and address.
- Check that the certificate you have covers the product you are buying by clicking on the certificate and scrolling down to the list of products covered. Here you’ll find a description of the product types, species and claims covered by the certificate. It is important to check this as suppliers may only have part of their production certified.
In the case of PEFC material, you can:
- Check that the certificate is authentic by:
- Finding the ‘certificate number’
- Entering the certificate code at https://www.pefc.org/find-certified/certified-certificates
- Check that the certificate you have is valid and has not expired or been suspended. Valid certificates are listed as being such in the ‘certificate status’ part of the search results page.
- Check that the certificate you have was issued to the company that you are buying from by clicking on ‘more info’ and checking that the name and address on the certificate matches your supplier's name and address.
- Check that the certificate you have covers the product you are buying by clicking on ‘more info’ and scrolling down to the list of products covered. It is important to check this as suppliers may only have part of their production certified.
In the case of Rainforest Alliance VLC material, you can:
- Consult the list of active VLC clients at http://www.rainforest-alliance.org/forestry/verification/transparency/verification-clients
- Check that your material is covered by a license at http://www.rainforest-alliance.org/business/forestry/verification/transparency/vlovlc-summaries
Buying certified wood is not a cast iron guarantee that you are buying legal wood. It is, however, still a very strong indication of legality, and therefore remains one of the most useful ways of assessing and mitigating the risk of illegality.
The amount of due diligence you will need to do on certified wood will be substantially smaller than the amount you would have to do on uncertified wood. For certified wood, you will need to:
- Ensure that you the certification system you are using covers the points listed in this article, either by carrying out the assessment yourself or by reading the assessments of the certification systems that we have published.
- Assess and, if necessary, mitigate any risks that the certification system does not cover.
- Check that the certificate you have received is legitimate, and actually covers your product.
- Check whether there is any other information which calls into question either the legitimacy the certification system or the legality of the product itself.
- Keep written records of what you’ve done.