Wednesday, August 21, 2024
The EU’s latest sustainability regulations are having a significant impact on industries within the EU and beyond its borders. Consequently, the wood industry is under growing pressure to adopt practices that ensure sustainable wood production, processing, and sales. While these new requirements aim to foster more environmentally friendly operations across nations, they also demand collective effort throughout the entire value chain.
The European Union introduced the deforestation regulation (EUDR) in June 2023, accompanied by an 18-month transition period. The regulation’s primary goal is to reduce deforestation and forest degradation. Many operators are already feeling the effects of these changes.
Let’s get an insight on what EUDR means for the wood industry?
The deforestation regulation (EUDR) mandates stricter measures to ensure that wood products entering the market have not contributed to deforestation. Companies affected by this regulation must prove that the wood they collect, produce, process, or sell comes from sustainable sources and has not been harvested from primary forests. This requires comprehensive documentation covering the entire value chain.
In practice, this is verified through a Due Diligence Assurance process at every stage where wood is processed and brought to market. Information on the wood’s origin, including key details about the supplier and buyer, must be verifiable at all stages and retained for a minimum of five years.
Who is responsible for ensuring that the requirements are met?
The entire value chain for wood-based products is affected by the requirements. Until country-level legislation is imposed, there are open questions on how the EUDR will be implemented in practice. The circumstances of timber trade matter in terms of who needs to bear responsibility for meeting the requirements.
Because of the potential complexity of the value chain and process, it is necessary to collect and retain the required information at different stages, every time the material changes owner and whenever it is processed further. A forest company purchasing wood on its own behalf is obligated to take on the requirements of the regulation. On the other hand, if an operator purchases wood from a forest owner in a procurement trade situation, the forest owner must carry out the DD assurance or authorise the operator to do it on their behalf.
Another significant EU regulation to be aware of is the Corporate Sustainability Reporting Directive (CSRD), which seeks to standardise sustainability reporting across various industries. The CSRD is being gradually rolled out to companies of different sizes, with some organisations needing to include it in their reporting for the 2024 financial year. Its implementation is governed by the European Sustainability Reporting Standard (ESRS). As sustainability requirements become more stringent, companies will need to invest considerable effort in gathering and maintaining the necessary data to comply with these new standards.
Source: PINJA
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