Australian Industry Timber Due Diligence. Guidance and Tools. Stephen Mitchell Sustainability Programme Manager

Transcription

1 Australian Industry Timber Due Diligence Guidance and Tools Stephen Mitchell Sustainability Programme Manager 1

2 Illegal Logging Undercuts legitimate trade Contributes to environmental and social degradation Organised crime responsible in some countries (Interpol 2012) Governments loose revenue (i.e. royalties) A significant concern in some developing countries 2

3 International Context European Union EUTR 2012 From March 2013 importers and domestic supplier must undertake due diligence USA - Lacey Act amendments 2008 Undertaking due care mitigates penalties Many bilateral agreements and projects to reduce illegal logging in some developing countries E.g. Africa, SE Asia Many private company procurement policies. 3

4 Australian Legislation Illegal Logging Prohibition Act 2012 Implemented in two stages - Nov / Nov Prohibition, penalties, inspection regime Illegal Logging Prohibition Regulation 2013 Effective 30th November 2014 Defines regulated timber products and exemptions Details due diligence requirements. 4

5 Australian Legislation: ILP Act - from 30/11/14 Prohibited to import illegally logged regulated timber products or Penalties Up to 5 years jail Fine ($85k for individual, $425k for company) Forfeiture Level of proof for Commonwealth Illegally logged & importer negligent 5

6 Australian Legislation: Reg - from 30/11/14 Importers of regulated timber products & domestic processors of raw logs Must undertake due diligence 1. Gather information 2. Identify and assess risk 3. Mitigate (if risk other than low) Fines $51k for individual $255k for company 6

7 Australian Legislation: Definition of illegally logged harvested in contravention of laws in force in the place (whether or not in Australia) where the timber was harvested. 7

8 This Project Stage 1: Investigation of current due-diligence measures for illegally logged wood Stage 2: Development of due diligence guidance a nd tools & 8

9 This Project: Stage 1 Part I - timber and timber products All 28 importers are undertaking some due diligence Certification and large range of 3rd party legality verification (merbau) and government documentation Practices driven largely to protect their reputation as well as market demands from key customers. Part II pulp, paper, wood furniture and other wood pulp and paper COC to FSC and/or PEFC/AFS wood furniture not much except single, stable suppliers and regular visits to them. 9

10 Stage 1: Timber and timber products: Drivers Source: Mitchell, S. (2012) Demonstrating legal wood products - Industry benchmarking Part I. Prepared for Forest & Wood Products Australia. Available at Based on interviews with twenty-eight regular Australian timber product importers/wholesalers 10

11 Stage 2: Guidance and tools Australian Industry Timber Due Diligence (AITDD) Based on: Research into current practices Research into overseas due diligence systems particularly European Timber Trade Federation ILP Act, Regulation, accompanying explanatory statements & memo and Dept. of Agriculture information Consultation with domestic and importer trade Freely available at 11

12 Timber Due Diligence: Options Develop and use your own system of procedures Extend existing system (e.g. FSC, PEFC or AFS CoC) AITDD tools and guidance Commonwealth Department of Agriculture tools and guidance Other standards (e.g. EU NEPCon LegalSource system, US ANS Standard for Due Diligence in Procuring / Sourcing Legal Timber later in 2014) 12

13 AITDD: Tools and Guidance Domestic processors of raw logs Australian sawmills, pulp and paper mills etc Importers into Australia of regulated timber products most timber, pulp, paper and wood furniture 13

14 AITDD: Domestic processors 1. Overview of legislation and obligations 2. Due Diligence Summary Template Note: State specific guidelines (to be provided by State and Commonwealth Governments) will be important for straight forward compliance for some domestic processors 14

15 AITDD: Importers AITDD-01 AITDD-02 AITDD-03 AITDD-04 AITDD-05 Due diligence system guide Annexes 1-8 Company due diligence system manual template Supplier and product due-diligence spreadsheet Supplier questionnaire template Evaluating legal conformance at forest level 15

16 AITDD-01 Importers due diligence system guide Core document Step by step guidance on DD 16

17 Commit to purchasing of legal harvested products Appoint a responsible person Establish written procedures responsibilities train staff Evaluate information Assess compliance against timber legality frameworks and/or country specific guidance (if info. available) Assess risk against 4 factors Identify specific risks (where not low) Establish a due diligence system Gather information Assess compliance or risk Mitigate risk (if not low) Gather information about: products country of harvest species supply chain Collate any certification, legality verification (if available) Gather evidence of compliance (if needed) Identify risk mitigation measures Involve supply chain Implement mitigation measures: E.g. more information independent verification 17

18 AITDD-01 Step 1. Set up system Are your timber products regulated timber products? (Info. sheet) Assign person with overall responsibility for DD Develop a legal timber procurement policy (doesn't have to be public) (Annex 1) Read communications guidance (Annex 2) Develop written procedures (AITDD-02): Assign specific responsibilities & train staff. 18

19 AITDD-01 Step 2. Gather information As much info. as is reasonably practicable Type of product Common name, or scientific name Country, region and/or forest harvesting unit (FMU) of harvest Country of manufacture Name and address of supplier Quantity/volume Any evidence of compliance with laws that relate to harvesting Supplier Spreadsheet (AITDD-03) Questionnaire (Annex) where additional info. needed 19

20 AITDD-01 Step 2. Gather information Evidence around: Legal right to harvest Harvested within legally gazetted boundaries Payment of harvesting royalties Any person with legal rights of use/tenure, their rights not affected by harvesting 20

21 AITDD-01 Step 3. Risk identification and assessment METHOD 1 - Assess compliance with a scheduled timber legality framework (FSC or PEFC FM) METHOD 2 - Assess compliance with relevant scheduled country specific guideline METHOD 3 - FSC / PEFC Chain of Custody Certification and/or 3rd party verification METHOD 4 - Assess risk against four factors. Annex 4: Risk assessment flowcharts 21

22 AITDD-01 Step 3. Risk identification and assessment METHOD 4 - Assess against four factors Prevalence of illegal logging in the area in which the timber was harvested Prevalence of illegal logging of the species in the area in which the timber was harvested Any armed conflict in area of harvest Complexity of the product. Annex 4: Risk assessment flowcharts 22

23 AITDD-01 Step 3. Risk identification and assessment 23

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25 AITDD-01 Step 3. Risk identification and assessment Record risk conclusion AITDD-03 Supplier and product spreadsheet If risk not low go to next Step (Risk Mitigation) Annex 4: Risk assessment flowcharts 25

26 AITDD-01 Step 3. Risk identification and assessment Must also consider any other information that you ought reasonably know about. Annex 4: Risk assessment flowcharts Annex 6: Other information sources 26

27 AITDD-01 Step 4. Risk mitigation If risk anything other than low Mitigation measures adequate and proportionate to risk include: FHU audit - document based FHU audit - onsite Requesting certified or verified material Supplier replacement Product replacement Recommendation - use mitigation measure that gives strongest assurance of legality Record mitigation and reassess risk. AITDD-03 Supplier and product spreadsheet 27

28 AITDD-01 Other tools Importer due diligence overview and summary template (Annex 7) A template for importers to summarise their due diligence for particular suppliers and/or regulated timber product DRAFT Importer customs broker authorisation template (Annex 8) declaration for importers to authorise their customs broker to answer the required Customs Community Protection Question 28

29 AITDD-01 Due diligence system guide Annexes Explanation of terms 2. Company legal timber policy template 3. Communications guide 4. Risk assessment flowcharts 5. Template - letter for a supplier 6. Further information sources 7. Importer due diligence overview and summary template 8. DRAFT Template Importer s customs broker authorisation 29

30 AITDD-02 Due diligence system manual template If used must be adapted for circumstances Includes suggested words and/or space for: Procedures and documents - location Legal sourcing policy / commitment Quality system and management (e.g. Assignment of Responsibilities, Training and Competence Assurance, Due Diligence Revision Process, Procedures for Maintaining Records Relating to Certification, Communication Compliance) Material Control Gathering Supply Chain Information Risk Assessment & Risk Mitigation FAQs template for customers (e.g. Merchants) 30

31 AITDD-03 Supplier and product spreadsheet 31

32 AITDD-03 Supplier and product spreadsheet 32

33 AITDD-03 Supplier and product spreadsheet 33

34 AITDD-03 Supplier and product spreadsheet 34

35 AITDD-03 Supplier and product spreadsheet 35

36 AITDD-04 Supplier questionnaire template Brief cover letter and detailed attachment For sending to suppliers where important information is lacking Not for every supplier (e.g. low risk sources) Can also be used as basis for research by importer (where suppliers don't fill out questionnaires!) 36

37 AITDD-05 Evaluating legal conformance at forest level Where timber has been assessed as not a low risk at the forest harvesting unit (FHU) level and a FHU audit is chosen as a risk mitigating measure Includes table of scope of legislation under each and possible verifiers for legality Evaluation should only be done by someone with appropriate expertise and experience. 37

38 AITDD-05 Evaluating legal conformance at forest level Low risk if non-compliance are: a) temporary lapses; b) unusual/non systematic; or c) limited in temporal and spatial impact. 38

39 AITDD-05 Evaluating legal conformance at forest level Not low risk if non-compliances: a) continue over a long period of time b) affect a wide area and/or causes significant damage c) indicate the absence or break down of enforcement of the legal system d) are not corrected or adequately responded when identified; or e) have a significant negative impact on the production of forest products and other services, the forest ecosystem and directly or indirectly, any people. 39

40 Importer Information Sheets IIS-01 IIS-02 IIS-03 IIS-04 IIS-05 IIS-06 Importers Overview Regulated Timber Products Country of Harvest Risk CITES, Australia and Timber Products PEFC Endorsed Standards Indonesia TLAS/SVLK & FLEGT/V-legal 40

41 IIS-02 Regulated Timber Products Based on Tariff codes Regulated: Sawn timber, mouldings, veneer, plywood, MDF, Doors & window joinery Most pulp and paper products, wood furniture Exempt or not regulated: Recycled timber/pulp/paper Wood packaging/pallets <$1000 customs value 41

42 IIS-02 Regulated Timber Products Includes worked examples of what is and what isn't an RTP E.g. Boxes of tissue boxes Lists of typical products under tariff codes Important - customs brokers / independent advice be consulted in tariff classification. 42

43 IIS-03 Country of Harvest Illegal Logging Indicators Includes key indicators of risk of illegal logging at a country level including: Transparency International's Corruption Perception Index (CPI) of major wood supply countries. NEPCon's FSC Global Forestry Register A list of the status of countries negotiating Voluntary Partnership Agreements (VPAs) with the European Union (EU) as part of the EU's FLEGT (Forest Legality Enforcement Governance and Trade) Program. 43

44 IIS-05 Indonesia TLAS / SVLK & FLEGT / V-legal Information on the status of the Indonesian timber legality assurance system (TLAS or SVLK) for most timber product exports from Indonesia. Includes sample SVLK certificates & V-legal licenses. 44

45 Timber Due Diligence starter training Three pilot one day workshops in early June Melbourne, Sydney and Brisbane Includes case studies (much easier to understand!) To be run with The Forest Trust (TFT) Programme and registration shortly 45

46 Thank you Questions 46