How European Wood Businesses are Coping with Legislation

An Importing Trade Association View

Rachel Butler

Head of Sustainability UK Timber Trade Federation (TTF)

representing the European Timber Trade Federation (ETTF)

European Timber Trade Federation

• Established in 2009 and brought together organisations representing hardwood (UCBD), softwood (UCBR) & panels (UCIP);– Also FEBO, which represent timber distributors &

merchants

• Membership represents 12 key European importing countries;– Netherlands, UK, Spain, Sweden, Belgium, France,

Germany, Greece, Italy, Portugal, Denmark & Norway

• Strengthen the voice and representation of the European timber importers.

European Trade Facts

• Less than 10% EU timber consumption is imported from;– China, US, Russia, Brazil, Malaysia, Indonesia,

Chile, Vietnam, Cameroon, Gabon & Thailand

• European forestry reserves are growing annually – Estimated as the size of Cyprus every year

• Global joint efforts to curb illegal by Governments, NGOs and the trade are perceived to be working– Recent Chatham House Report

Current EU Market Demand for Legal & Sustainable Timber

• Market for certified timber is still a push-market

• Enough supply but very often lacking demand– UK is strongest market has risen significantly in recent years but

still perceived as low

• With some exceptions: limited data available!– ETTF has just commissioned a market report to collate data across

all member TTFs

• Dutch Market 2009 65% certified

• UK Market 2010 85% certified

ETTF & EU Timber Regulation

• Shares the commitment of the EU to eliminate illegal timber from supply chains; – Creates a level playing field

– Supported the prohibition

• Some member TTFs are already implementing due diligence and supporting their trade;– E.g. Netherlands, UK & France

• Some member TTFs are planning and developing due diligence systems;– E.g Germany, Italy

Facilitating Due Diligence: UK RPP Case Study

• UK developed Responsible Purchasing Policy (RPP); about 7 years ago

– Voted to make Due Diligence mandatory in 2008 under Code of Conduct

– All members obligated in 2010; 6 out of approx 150 are now suspended

– TTF provides standard forms, guidance & technical assistance

– Sufficient to meet the new future EU Timber Regulation as it facilitates due diligence?

UK RPP Case Study: Due Diligence Core Elements

• Public commitment to legal and sustainable timber • Complete supplier product screening• Objective assessment system & credible evidence• Continuous improvement & target setting• Supplier feedback• Independent auditing • Annual reporting • Communications Protocol• Governance & Sanctions • Training for auditors & members

UK RPP Case Study: Process

• Recognises that only FLEGT is an automatic passport!

• Evaluates risk of uncertified/unverified timber products, using a standard format and guidance

• Records products where risk mitigation is in hand & provides guidance on these risk mitigation schemes;– negligible risk (certified & FLEGT)– managed risk (legality verification, TTAP, TFT, GFTN etc)

• Members set targets & are independently audited annually;

• Independent Body collates annual submissions

UK RPP Case Study:Product Risk Rating

• Classify the country using the Transparency International Risk Index.

• Use the appropriate decision tree to risk rate products as high, medium or low

• Risk rating process linked to TTF’s country guidance to make decision more objective rather than subjective.

UK Case Study: RPP Overview

• Cost effective in delivering due diligence

• Risk evaluation is separate to risk mitigation

• Guidance & standard forms

• Communications & Governance

• Independent audit

• Training for members & auditors

• RPP is still paper based & not “real” time

• Does not guarantee products are legal

• Small members have resource issues

• Audit costs can be high

• Many not prepared, but the importing trade/retailers are waking up!

• Changes in timber flows & switching to lower risk producer countries (already happening!)

• Increase in misleading & false claims

• Is it a driver for sustainable timber?

Implications & Consequences of TR for ETTF Members

ETTF’s Future Development on TR

• Need to support EU TR at EU Level, ETTF are considering;

– One Responsible Purchasing Policy

– One set of guidance on countries of origin, certification, verification etc

– Possibly becoming an EU Monitoring Organisation for smaller TTFs

• Illegal timber is damaging the

image of all timber products > ETTF welcomes TR

• Legal proof is the basic requirement, but the current demand where it exists & trade preference is for sustainably produced timber.

• Key market drivers for certification remain (Public Procurement, Green Building Initiatives, RPPs, etc.)

• There is no premium for legal, but still a premium for SFM certified tropical timber products

• Demand is still lacking but legislation will increase demand within our markets.

• FLEGT timber, we do need it!

• Need for European wide guidance & standard RPP

Concluding remarks:

Thank you for your attention!

Rachel Butler

rbutler@ttf.co.uk

European Timber Trade Federation