Why international illegal logging might represent a risk for retailers

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A UK-based retailer might be forgiven for thinking that illegal logging in, say, Africa or India, is a world away from its business concerns. However, two recent prosecutions by the Office for Product and Safety Standards (OPSS) highlight that the Timber and Timber Products (Placing on the Market) Regulation 2013 (the EU Timber Regulation) could represent a real risk.  Walker Morris’ Retail and Regulatory experts Gwendoline Davies, Jane Weaver and Claire Burrows explain and offer their practical advice.

What does the law say?

The EU Timber Regulation has been enacted to counter trade in illegally harvested timber and timber products by imposing a number of criminal offences:

  • Placing illegally harvested timber on the market for the first time;
  • Failing to exercise due diligence to check the legality of the timber when placing timber or timber products on the market for the first time;
  • Failing to maintain and evaluate a due diligence system;
  • For those who buy or sell timber products already on the market, failing to keep the required information about suppliers and customers to make timber more easily traceable;
  • Obstructing an inspector; and
  • Failing to comply with a remedial notice.

The offences are variously punishable by a fine and/or imprisonment. The OPSS also has powers of entry, inspection and the power to seize illegally harvested timber.

What is the risk for retailers?

Any retailer whose business involves the buying or selling of timber for commercial purposes, or otherwise placing internationally-sourced wood or wood products on to the market, obviously needs to comply with the Regulations… but what does that really mean? What types of wood products are caught, and to what extent do retailers whose primary products are not timber-based need to be concerned?

In fact, the EU Timber Regulation has an incredibly wide reach. A list of products covered can be found here, but could (non-exhaustively) include:

  • Certain types of non-printed paper, including craft paper, stationery, till rolls;
  • Plywood, veneered wood, fibreboard, laminated wood and other wood-based building materials or prefabricated buildings which might be imported directly and then used in the course of a retailer’s business (for example on any fit-out or as additional office space);
  • Casks, barrels, vats, tubs, pallets and packing cases/boxes (unless they are used exclusively as packing material to support another product);
  • Wooden furniture or artefacts, even including frames for paintings, photos, mirrors or the like; and
  • Sawdust, logs, briquettes and similar.

The OPSS was created in January 2018. Its update published in July 2018 revealed that two businesses have recently been prosecuted under the EU Timber Regulation: one retailer being fined for importing an Indian sideboard made from illegally harvested timber; and one timber merchant being fined for due diligence failings.  The UK government has also recently indicated that it intends to retain the current regime (with only minor technical changes) post-Brexit.  This is therefore clearly a live issue of which all retailers should be aware.

What can retailers do?

  • Retailers should conduct a risk assessment to establish whether they are an ‘operator’ or a ‘trader’ (or both) under the EU Timber Regulation. (Operators are those who first place timber products on the EU market; traders are those who buy or sell timber or timber products already on the market.)
  • Retailers should be aware of which obligations/offences apply, as there are different levels of responsibilities. For example, operators must adequately check the legality of the timber before placing it on the EU market, whereas traders must keep track of who they buy from and sell to.
  • Retailers should note which products do and do not fall under the Regulations. For example, the Regulations do not apply to recycled products, some bamboo and rattan products, or to timber that is being bought or sold by private individuals for their own personal use.
  • Evidence of illegal logging across the world may be available from various sources, such as research institutions and government sources. Retailers may wish to keep up-to-date with this information. This could involve setting-up alerts with key sources so as to be kept apprised of new illegal logging warnings.
  • Following a detailed risk assessment, retailers should introduce or amend such appropriate policies, procedures, staff training, due diligence and record-keeping measures as are proportionate to the risks identified. Doing this could form the basis of any due diligence defence that a retailer may wish to raise if/when the OPSS does come knocking.
  • Retailers may also wish to contractually oblige suppliers to submit to audits to verify legality, transparency and traceability of all timber and timber products across the supply chain.

If you would like any further advice or assistance in connection with this or any other Retail or Regulatory-related matter, please do not hesitate to contact Gwendoline, Jane or Claire, who will be happy to help.