Packaging and the EU

That the world's largest economy and single market is moving to block illegal timber is undoubtedly a good thing, but what does this regulation mean in practice for the packaging industry; and how should it respond?

The first point to note is that the European Union Timber Regulation is focused on almost all types of timber product, from wood in the
rough, all the way through to pulp, paper and packaging.

The second point is that the EUTR applies equally to both imported and domestically produced timber products.

The third is that unlike its global counterparts such as the US Lacey Act, the EUTR is focused on the "point of entry". This means the organisation that first places the product on the market through the course of commercial activity, such as through importing packaging, is required to prove the product has come from a legal source.

This organisation, in the parlance of the EUTR, is referred to as an "operator". To achieve their new legal obligations after the 3March deadline, operators will need to use capable due diligence systems.

Other users of timber, such as "traders" (those who purchase products that have already been placed on the market) will need to keep records of the operator from whom the product was purchased.

Due diligence systems
For operators, a capable due diligence system must have three components - these are access to information, risk assessment and
risk mitigation.

In practice, as a packaging operator, imagine achieving this through setting up a two-stage process. The first stage, an information audit, would quickly establish through the provision of timber legality certification or information on the type or origin of product, the level of compliance with the country of origin's applicable legislation or the likelihood of illegal sourcing.

The majority of this information is readily promoted by responsible suppliers and will enable operators to determine if a timber source is low risk and clear for use in Europe. It will therefore be a competitive advantage to source timber products that have demonstrable low risk through the provided information.

For those operators that cannot demonstrate low risk through an information audit, then risk mitigation must be employed. This could include the sourcing of additional information that demonstrates low risk (either from the supplier or an independent source), or
choosing to switch supply to a demonstrable low risk source.

The role of certification - third party and national
One of the simplest mechanisms for operators to demonstrate legality is by looking to source certified products.

Sourcing timber from suppliers with third party certification such as through the Programme for the Endorsement of Forest
Certification (PEFC) or the Forest Stewardship Council (FSC) is an increasingly popular approach, and third party schemes such as these are likely to provide a level of assurance that the covered product is low risk.

However, such certification does not replace the need for a due diligence system, as operators will still need to be able to demonstrate that the product sourced is covered by the given certification and that the third party organisation is capable of such assurance.

National certification schemes are another route. Timber producing nations such as Ghana, Malaysia and Indonesia
have acknowledged that they need to support their legal industries through making it possible to demonstrate legal sourcing compliance.

Some of these nations are working towards this through the development of national legality of origin schemes.

Getting ready for the EUTR
The packaging industry should welcome the EUTR. By closing its single market to illegal timber and by placing the requirements of due diligence on EU businesses whom the EU can then regulate, the EUTR will help to reduce the global problem of illegal deforestation.

For suppliers such as Asia Pulp & Paper and its competitors, the EUTR is welcomed - it enables fair competition and provides a
mechanism by which supplier engagement and compliance can be assured.