Forests and agriculture | Qa

Radical regulation for better forest protection

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Supply chain certainty is the real challenge

US and EU rules on timber sustainability have been tightened, and big companies want more certainty in their supply chains. Public policy expert Stephen Adams outlines what the regulations require and how they can help combat deforestation on a large scale

Why do you think the sustainable timber debate is something more companies are taking seriously?

The market for timber-derived products has become increasingly concerned about how to guarantee sustainability down long complicated global supply chains. Two factors have pushed the debate forward.

Firstly there have been improvements in public policy strategy, principally amendments to the Lacey Act in the US and EU timber regulations in Europe to change the due diligence requirements for timber importers.

Secondly, the market has taken matters into its own hands somewhat, through a policy of exclusion of companies that are not making the right commitments, as a way of informally policing the same aims.

These moves are driven by customer sensitivity to sustainability. Supply chains are now global, and there is a great distance between the origin of commodities such as timber and the procurer. Yet customers expect certainty about what they are buying  – and companies are looking for ways to provide that certainty.

What have been the specific developments for EU regulation changes? What’s going to be next?

An important development for the EU’s forest law enforcement, governance and trade (FLEGT) [http://www.euflegt.efi.int/home] process is to make a success of the EU-Indonesia voluntary partnership agreement, which is the first of its kind and the next big step for FLEGT. This states that when the Indonesian domestic regulations have reached a sufficient standard, timber from Indonesia will be treated by the EU as automatically meeting EU Timber Regulation standards. This will sharply reduce the scale of due diligence obligations for EU-based importers from Indonesia.

The VPA is signed but not yet in operation. It looks possible that it may come into force during 2015. The challenge now is to make the Indonesian forest management certification system (known as SVLK) a success, meaning that it operates well and is properly enforced. Only then can the VPA properly come into operation. 

Getting SVLK up to scratch is a complicated process, not least because Indonesia’s timber sector is large and highly complex. There are significant capacity issues in terms of auditing, for example. The answer is not to relax efforts, but to help Indonesian companies achieve the capacity required.

The EU-Indonesia VPA shows that it is possible for bilateral cooperation on regulatory standards to drive the common goal of better enforcement of environmental protection.

How is the Lacey Act different?

While the Lacey Act has similar intentions to the EU Timber Regulation, being targeted at the import and sale of timber into the US market, it differs in a couple of basic ways. The Lacey Act criminalises the import or sale of illegal timber on the US market , while the EU’s timber regulations criminalise not the import of timber itself, but the failure to carry out  at the point of placing timber on the market for the first time due diligence on what you are importing.

There is a really interesting challenge for the US and EU in how they can work more closely on their policing of illegal logging and enforcement. FLEGT and the Lacey Act are very close in terms of their intent, so it would make sense for there to be some common standards, or for the US and the EU to mutually recognise each others’ standards. This is, of course, not something that the EU and US have typically been good at!

While regulation has a clear role to play, what are the pros and cons of voluntary timber certification schemes?

If the challenge is how to create certainty in the supply chain then there are certain tools that can help achieve this. The law, and the obligations it imposes, is one.

Certification is another, but although with certification systems that are market based is that – just like mandatory systems – everything depends on credibility of their design. It is critical that the science behind both kinds of systems is robust and regularly refreshed as companies end up relying on the science in the claims they make.

When considering a timber certification system, companies should ask firstly if the system is sound. Then they need to judge if their customers will find the certification system reassuring. 

Thirdly, companies should consider if the certification system allows the sourcing they need.

The Forest Stewardship Council is the most recognised certification scheme. But, at the moment, because of its certification rules, FSC is able to cover only parts of the global forestry market. For Indonesian timber suppliers it is hard to achieve this certification as FSC has its strict rules about how old a plantation has to be before it can be certified. This can be a problem for some fast-growing timber crops.

So, a question for FSC is whether they want to be a system that can’t be applied to vast swathes of the market in the developing world. If the aim is increasing awareness of sustainable practice, then self-excluding yourself doesn’t make sense. FSC is successful in certain markets, but not yet globally. The problem is that what might work in northern European pine plantations is not necessarily applicable in other markets.

Many big companies are moving the debate to “no deforestation” – is this the right move?

There’s certainly a lot of interest around now around the idea of making the next step in sustainability commitments no deforestation. frameworks And if we can solve the definition problems – around what “no deforestation” actually means – this is in many ways the next step from anti-illegal logging. Strict definitions are required, which take account of questions such as how to protect high-conservation value forests.

It could be the next frontier, getting the big procurers to see if they can really put together a no deforestation supply chain that can be verified in a credible way.

Finding the right NGO partners to help tackle deforestation can be very difficult for global companies with complicated supply chains. What should companies look for?

The NGOs that make the best partners are the ones committed to constructive change. While we need critics, we also need those that are prepared to move from criticism to planning for improvements. What defines a serious civil society partner is someone that is willing to be at the table and helping to implement change.

The EU-Indonesia voluntary partnership agreement has sought input from the toughest critics and actually includes civil society in its regular enforcement checks. There has been an issue of cultural change for all sides. For the government and companies, being in the room with your toughest critics is an uncomfortable place to be. Many companies had developed an inherent suspicion of NGOs. But now they are seeing the benefits of cooperation that is driving change.

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