Slide 1: EUTR/RPP Workshop Area Associations 2012
EUTR/ RPP Workshop Area Associations 2012
Slide 2: Outline of Workshop
Outline of Workshop • Wider context and drivers • EUTR- How much did you take in? • Due Diligence and RPP • Summary • Questions
Slide 3: Drivers for Legal and Sustainable Timber
Drivers for Legal and Sustainable Timber • Legislation – EU, US, Aus, Ch, JP all have laws making importing illegal timber an offense • Commercial – Reputational – Access to markets/ Public Procurement – Financial/ Investment – Level playing field
Slide 4: The Timber Trade
The Timber Trade Global Timber Trade Legal Timber Trade- TTF’s RPP Sustainable Timber Trade SFI MTSC CSA PEFC FSC Recycled timber Recycled timber Note- Diagram not to scale
Slide 5: EU Timber Regulation (EUTR) Overview
EU Timber Regulation (EUTR) Overview • What? • When? • How?
Slide 6: EU Timber Regulation (EUTR) Overview
EU Timber Regulation (EUTR) Overview • What? – Prohibition placing illegal timber on EU market • When? – Effective from March 3rd 2013 • How? – Due diligence system in place for all “Operators” placing timber/ timber products on to EU market – Traceability requirements for “Traders”
Slide 7: EU Timber Regulation (EUTR) Due Diligence
EU Timber Regulation (EUTR) Due Diligence What information do you need to have access to?
Slide 8: EUTR Due Diligence: Information Required
EU Timber Regulation (EUTR) Due Diligence What information do you need to have access to? a) Product description b) Species (trade and scientific name) c) Country of harvest (inc sub-regions if required) d) Quantity (vol./ weight/ units) e) Name & address of supplier f) Name & address of trader g) D
Slide 9: EUTR Scenario 1
EU Timber Regulation (EUTR) Scenario 1 Timber importers A, B & C import similar plywood products directly from outside the EU. They sell packs to building merchant D who in turn sells individual boards onto a bespoke furniture manufacturer E who uses the plywood in manufacturing sofas sold direct. •
Slide 10: EUTR Scenario 1 - DEFRA Guidance
EU Timber Regulation (EUTR) Scenario 1- DEFRA Guidance Timber importers A, B & C import similar plywood products directly from outside the EU. They sell packs to building merchant D who in turn sells individual boards onto a bespoke furniture manufacturer E who uses the plywood in manufacturing sofa
Slide 11: EUTR Scenario 2
EU Timber Regulation (EUTR) Scenario 2 Timber merchant H buys particle board from a supplier based outside the EU. Under the contract, ownership transfers immediately to timber merchant H while the particle board is still outside the EU. The particle board is transported to the UK and brought throug
Slide 12: EUTR Scenario 2 - DEFRA Guidance
EU Timber Regulation (EUTR) Scenario 2- DEFRA Guidance Timber merchant H buys particle board from a supplier based outside the EU. Under the contract, ownership transfers immediately to timber merchant H while the particle board is still outside the EU. The particle board is transported to the UK an
Slide 13: EUTR DEFRA Guidance on Agents
EU Timber Regulation (EUTR) DEFRA Guidance on Agents • The position under the Regulation of ‘agents’ who act as middle men, sourcing products for others and not merely acting as shipping agents, will need to be determined by reference to the particular facts of each case and the applicable contractu
Slide 14: EUTR Enforcement & Penalties
EU Timber Regulation (EUTR) Enforcement & Penalties • DEFRA has now appointed Competent Authority – National Measurement Office – Experience of DDS enforcement • Competent Authority to carry out checks based on substantiated 3rd party evidence – Likely to be environmental NGO’s • Legal proceedings f
Slide 15: EUTR Enforcement & Penalties…
EU Timber Regulation (EUTR) Enforcement & Penalties… • In practice, ENGO’s likely to focus on recognisable names/ company’s; • For such companies, commercial penalties likely to be greater than legal ones – Includes; reputational, market share, investors and share price
Slide 16: Responsible Purchasing Policy
Responsible Purchasing Policy • TTF’s framework for members – Established and continuously developed since 2003 – Complements existing schemes (FSC, PEFC) – Provides standard forms, guidance & technical assistance/ tools • Code of Conduct revised in 2008 to make DD mandatory – 92% put it in place in
Slide 17: RPP Process Overview
RPP Process Overview • Screen out products where risk manag’t is in hand & RPP provides guidance on schemes; – negligible risk (FSC/ PEFC certified & FLEGT) – managed risk (legality verification, TTAP, TFT, GFTN) • Tools and guidance to collect information on other timber products to assess risk • M
Slide 18: RPP advantages & disadvantages
RPP advantages & disadvantages • Cost effective framework for real time due diligence • Complements PEFC/ FSC CoC • Risk assessment is separate to risk management • Guidance & standard forms • Supplier engagement and feedback • Communications & governance • Credible via independent verification • Tr
Slide 19: Next Steps: Understand your legal obligations
Next Steps 1 Understand your legal obligations • Establish if you are the “operator” i.e. first placer or “trader” at product/ transaction level – Some grey areas still yet to be clarified e.g. agents – If in doubt, prudent to assume “operator” – Best practice to assume “operator” for very high risk
Slide 20: Next Steps: Understand responsibilities
Next Steps 2 Understand responsibilities • TTF responsibilities – Ensure members are informed and engaged with good access to information – Support members in due diligence with tools and guidance – Build awareness and understanding of the RPP to timber customers – Use EUTR to grow reputation of tim
Slide 21: Next Steps: Effective Implementation
Next Steps 3 Effective Implementation • Accept due diligence is an art not a science • Engage with EUTR at ALL levels and use as an opportunity over non-TTF members • Update/ adapt your business systems to integrate the RPP as best as possible • Take responsibility for your risk assessment • If goin
Slide 22: Questions?
Responsible Questions? Ww
Slide 23: Contact Details
Contact Details Anand Punja UK Timber Trade Federation apunja@ttf.co.uk +44 (0) 207 291 5373
Slide 24: Detailed RPP Slides
TTF NOTE Detailed RPP Slides Only use if needed
Slide 25: Step 1 - Screening out risk managed projects
Step 1- Screening out risk managed projects • Analyse existing information on products • Screen out any risk managed products; – Products bought as “Trader”. Essentially, risk managed by Operator – Certified Product (i.e. FSC, PEFC) – Recognised third party verified legal compliance schemes (SGS TLT
Slide 26: Certification & Legality Verification
Certification & Legality Verification • Certification and legality verification is NOT an automatic passport • Current guidance from TTF is that no further due diligence is required – In practice these schemes already mitigate risk – Caution 1: This may not give you the information you require e.g.
Slide 27: Step 2 - Initial Risk Assessment
Step 2- Initial Risk Assessment • All products not from risk managed sources • Can you identify the forest origin? • How complex is the supply chain? • Key factors – Country (inc sub-regional) and species • Use third party reports/ info- credibility? • TTF Risk Assessment & Country Guidance • If low
Slide 28: Step 3 - Collect further evidence of legality
Step 3- Collect further evidence of legality • All products risk assessed as medium to high initially • Use TTF Supplier Return • Available in 5 other languages • Self declaration not good enough – Need documentary evidence • Documentation to show – Forest origin – Well managed/ controlled supply ch
Slide 29: Step 3 - Example Supplier Returns
Step 3 - Example Supplier Returns Plantation species are low risk (see Country Guidance to check) Timber products from the open market may be high risk unless legal documents proving origin are provided. Where suppliers say “Y”, they should provide evidence to back it up. This can help to reduce the
Slide 30: Step 4 - Detailed Risk Assessment
Step 4- Detailed Risk Assessment • Analyse information received from suppliers • Can you identify the forest origin? • How complex is the supply chain? • Key factors – Country (inc sub-regional) & species • Is information/ documentation credible? • TTF Risk Assessment & Country Guidance • If assesse
Slide 31: RPP Tools for Risk Assessment
RPP Tools for Risk Assessment • Objectivity is vital • Use the appropriate decision tree to risk rate products (high/ medium/ low) • Classify the country risk using the Transparency International CPI Index • TTF’s country guidance • Judging the objectivity of information/ evidence collected from sup
Slide 32: Step 4 - Detailed Risk Assessment
Step 4- Detailed Risk Assessment 32
Slide 33: Step 5 - Risk Mitigation
Step 5 - Risk Mitigation • Before purchasing or placing products on market depending on risk High Risk Products RPP members should immediately review purchasing products rated as high risk; Recommended actions to improve risk include: • First and foremost try to work with your supplier to reduce the
Slide 34: Step 6 - Management Review, Risk Profile and Disclosure Report
Step 6- Manag’t Review, Risk Profile and Disclosure Report • Manag’t review of DD system – Quick & simple if using RPP – Short narrative helps auditors understand your business • Analyse information in annual disclosure, build risk profile and set targets to move forward – TTF looking at benchmarkin
Slide 35: Summary Report - targets
Responsible Purchaser Dir mice: Cumpany. Summary Report- targets ary vin orien anes rays. Note You can choose to break targets down by product groups below or as an overal company target. As you enter volumes: (e.g. in row 5, 10, 14 etc), % should calculate automatically (in row6, 11,15 etc). Tick U
Slide 36: Step 7 - Credibility through Verification and Transparency
Step 7- Credibility through Verification and Transparency • Independent verification to check – Objectivity of risk assessment – Appropriateness of mitigating actions – Continuous improvement in lowering risk – Using stepwise approach to managing out high risk timber • Extra level of assurance for e
Slide 37: Corrective Action Requests
Corrective Action Requests • In line with other ISO systems – Members with a Minor CAR have 8 weeks to comply – Members with a Major CAR have 4 weeks to comply – Observations to be addressed by next audit • matter referred to a sub-committee of Forests Forever Committee on a case by case basis. If a
Slide 38: RPP Overview
RPP Overview • Cost effective framework for real time due diligence • Complements PEFC/ FSC CoC • Risk assessment is separate to risk management • Guidance & standard forms • Supplier engagement and feedback • Communications & governance • Credible via independent verification • Training for members