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EU Timber Regulation

As a major global supplier of timber products from various origins, Olam International Ltd is committed to responsible forest management practices and internal due diligence of all wood sourced from outside our operations.

The European Union Timber Regulations (EUTR) came into force in March 2013 and we recognise the importance of outlining how Olam meets the specific legislation requirements. You can find this via the FAQ below which also details the additional processes we have put in place to ensure that only legal timber products are supplied to our customers.

 

FAQs

Why has the EUTR been brought in? Expand

In October 2010, the European Union adopted the EUTR (Regulation 995/2010) to prevent the importation and sale of illegal timber products.

Consequently from 3 March 2013, any Operator who places timber products on the EU market must have a system to reduce the risk that these products have been illegally harvested or transported.

 

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What are the key elements of the EUTR? Expand

The EUTR imposes three key requirements on EU Operators & Traders:

  1. It prohibits the import of illegally produced timber products to the EU market
  2. Timber products with a Forest Law Enforcement, Governance and Trade (FLEGT) or CITES license will be accepted as legal. In the absence of these licenses Operators must use ‘due diligence’ to verify the legal status of timber products
  3. Once timber products are placed on the EU market subsequent Traders must maintain records of their suppliers to ensure traceability back to the point of import.

With the exception of Indonesia, to date no origin country has arrived at a point where they can supply EU Operators with FLEGT licensed timber. Therefore, the only option currently open to EU Operators importing from any country but Indonesia is to conduct their own “Due Diligence” investigations.

 

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What are the key requirements of the EUTR? Expand

The regulation requires operators to minimise the risk of putting illegally produced timber products on the EU market. In the absence of a FLEGT licensing system operators need to:

  • Have reliable information including: product description, country, region or districts of origin, species, quality, supplier and information about compliance with national legislation
  • Based on this information, conduct a risk assessment of the probability of illegal timber products entering the supply chain
  • In the case where a high risk has been identified, undertake appropriate action to mitigate this (for instance, demanding additional information from a reputable third party)
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With no FLEGT licensing system in place, how will Olam demonstrate to customers that products meet EUTR requirements? Expand

As a minimum, customers will find in future the following on all invoices: product description, country, region or district of origin, species (botanical name), quality, supplier and information regarding compliance with national legislation.

The majority of timber products we supply are directly from Olam’s own concessions in the Republic of Congo. About 1.3 million hectares are FSC® certified, and we therefore have third party verification that wood sourced from these concessions is legal and has been produced in a responsible and sustainable manner. A new concession, which has successfully undergone an FSC Controlled Wood assessment provides timber that meets the EUTR norms of legality and traceability.

This means that timber products from Olam’s own concessions clearly fall within the EUTR’s ‘low risk’ classification.

Should timber products come from an external source, which is not yet verified by an independent third party, we systematically conduct our own verification to ensure that the timber supplied is legal and traceable. This applies in particular to our operations in Myanmar where the sale of all logs is managed by the Myanmar Timber Enterprise (MTE). There is no international certification or legality scheme functioning in Myanmar at the moment.  However, all CIL employees associated with timber purchasing are aware of the elements and criteria for the various Myanmar and international regulations. Our teams therefore undertake constant and robust due diligence, collecting data to ensure compliance and making relevant information available to customers. Equally, CIL recognises that credible independent certification of legality and chain of custody contributes to reducing the risk of timber entering the supply chain from illegal sources and provides extra reassurance for customers. We therefore engaged The Forest Trust (TFT) in 2013 to undertake an initial one-off gap assessment of CIL’s supply chain against internationally recognised legality standards. This was part of our initiative to implement a transparent and detailed Chain of Custody framework. CIL has used the report to guide  efforts towards attaining credible third party legality certification to ensure its ability to continue exporting quality wood products to international markets. Until this is achieved we are able to offer our own set of documents to show timber source, legality and traceability.

We are also in constant and constructive dialogue with the Myanmar authorities, our buyers, various certification agencies and EUTR verifiers to put in place a third party legality verification system for Myanmar.  This will help to provide standardised legality and traceability documents required by our customers.

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Does the information provided by Olam and the 3rd party verification reports provided cover all requirements of the EUTR for Due Diligence? Expand

Yes. The Regulation states that “any voluntary chain of custody mechanism” can be the basis for a Due Diligence System. However, it also “needs to fulfil the requirements of the Regulation”. On the latter condition Independent Certification or Verification assessments are mentioned as potential tools in assessing the risk of illegality for timber products. This is because they demonstrate, in principle, compliance to legality, including legal attribution of concessions, existence of formal management plans and their compliance to national laws, independent verification for the payment of taxes, etc. However, where there are any gaps, Olam will strive to provide buyers with additional information.

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