YOU are required to conduct Due Diligence by LAW

The Regulation requires that prior to importation ALL regulated timber products including furniture, furnishing, cabinetry and components must undergo Due Diligence and the evidence of this Due Diligence is recorded and retained.

Importers need to establish that the product they are importing is a regulated timber product. This can be done by using the Due Diligence Toolkit Template documents on this site.

In addition, if you are a processor you must conduct Due Diligence on all domestically grown logs prior to processing those logs.

Due Diligence is a matter of importers or processor undertaking a step-wise process to satisfy themselves that the regulated timber products being imported, or the Australian grown logs being processed are not derived from illegally logged timber.

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The regulation provides details on the due diligence process, which has these key components:

Establish a documented due diligence system (Refer to the Due Diligence System Template)
Information Gathering
Risk Assessment
Risk Mitigation
Maintenance of records.

For Processors

For Importers

01 - Case Study: Due Diligence on chairs from Malaysia

It is necessary for the system to be documented and records of the due diligence performed on product must be maintained for a minimum of 5 years. The requirement for a documented Due Diligence System also applies to processors of logs even if they are locally grown.

3.1 Establish a documented system

To meet the requirement of the regulation the importer and processors must establish a documented system for Due Diligence. Documenting and record keeping are a very important part of the Due Diligence process. Documenting the system allows the responsible staff clear guidance on what tasks are to be carried out as well as the method to be used for Due Diligence. The written records will provide the importer with evidence which the Department may ask for as part of their compliance program.

Use the Due Diligence Toolkit Template Document on this website to fast-track your reporting obligations.

Further information about the departments compliance process can be found at: http://www.agriculture.gov.au/forestry

The system must set out the process the importer or processor will use to carry out Due Diligence and assess the risk of the product containing illegally logged timber.

The system must contain:

Information about the company such as the Company Name, ABN, postal address and principle business activity.
the person responsible for the Due Diligence system must be identified along with their position title and contact details.
A written system. This includes any procedures, guidelines, templates and reference/s that must be used in carrying out the companies Due Diligence process.

This administrative tool entitled “Timber Due Diligence Toolkit Document Template” provides a template for a Due Diligence system along with some instruction on how to use it. It should not be viewed as a constraint on how the process should be carried out or documented but as an example of how it can be done. Users are encouraged to edit and change the document to suit the needs of their business.

3.2 Information gathering (including for complex products)

The Regulation mandates the need to obtain basic information for all imported regulated timber products prior to importation or prior to processing of domestic logs. The information required can be collected in a number of ways. For example, visits to the site, a discussion over the phone, email or completion of a questionnaire are just a few methods. The important thing is to keep written records of this information as records must be kept of the Due Diligence process.

The Regulation mandates the information required for importers of regulated timber products to obtain include.

A description of the timber component of the furniture, furnishing, cabinetry and components product including the trade name or common name and/or genus and scientific name of the tree from which the timber was produced.
The country, region of the country and the forest or plantation harvesting unit from which the timber portion of the furniture, furnishing, cabinetry and components product was harvested.
The country in which the timber component of the furniture, furnishing, cabinetry and components product was manufactured.
Details about the company supplying the product, and the quantity of the shipment of the product, expressed in volume, weight or number of units.
If a timber legality framework applies copies of certificates and evidence that the
product is certified.
If a country-specific guideline applies, the documents that the importer is required to obtain to demonstrate that guidelines have been met.
Evidence that the product has not been illegally logged, which, without limiting the evidence, may include evidence about:

– whether the harvesting of the species of tree from which the timber in the product is derived is prohibited in the place where the timber has been harvested, for example Rosewoods, Sandalwood and other CITES listed species (see Note 2 below); and

– if the harvesting of the timber in the place is authorised by legislation (including regulations)—whether the requirements of the legislation have been met for the harvesting of the timber; and

– if payment is required for the right to harvest the timber—whether that payment has been made; and

– if a person has legal rights of use and tenure in relation to the place in which the timber is harvested—whether the harvest of the timber is inconsistent with the law establishing or protecting those rights. (see Note 3 below)

Note 1: The timber legality framework and country specific guidelines information can be used to fulfil the requirements of the optional pathways for risk assessment. Refer to the section on risk assessment below.

Note 2: There are various sources of information relating to endangered timber species, CITES is the most reputable. More information on other endangered species can be found at: https://www.cites.org/eng/app/appendices.php. If the species is listed with CITES the product may not be illegally harvested but will be heavily regulated. Suitable CITES export licenses should be obtained.

Note 3: For an example of the types of regulations, payments and tenure evidence required for products originating from other countries refer to an example for Vietnam: https://flegttools.files.wordpress.com/2014/12/inf-06-forestry-risk-profile-vietnam-annex-ii-en-v1-0-01jun15.pdf

For processors of Australian grown logs a similar list of information is required to be gathered as follows:

A description of the raw log including the common name, genus or scientific name of the tree from which the log was derived.
The area in which the raw log was harvested including the State or Territory and forest harvesting unit.
Details about the company supplying the log, and the quantity of the shipment of the product, expressed in volume, weight or number of units.
If a timber legality framework applies copies of certificates and evidence that the product is certified.
If a State specific guideline applies, the documents that the processor is required to obtain to demonstrate that guidelines have been met.
Evidence that the product has not been illegally logged, which, without limiting the evidence, may include evidence about:

-whether the harvesting of the species of tree from which the timber in the product is derived is prohibited in the place where the timber has been harvested, for example Rosewoods, Sandalwood and other CITES listed species and

-if the harvesting of the timber in the place is authorised by legislation (including regulations)—whether the requirements of the legislation have been met for the harvesting of the timber; and

-if payment is required for the right to harvest the timber—whether that payment has been made; and

-if a person has legal rights of use and tenure in relation to the place in which the timber is harvested—whether the harvest of the timber is inconsistent with the law establishing or protecting those rights.

NOTE 1: The timber legality framework and state specific guidelines information can be used to fulfil the requirements of the optional pathways for risk assessment. Refer to the section on risk assessment below.

Other Important Information About Gathering Information

The Regulation requires information to be gathered where it is “reasonably practicable” to do so, so that the importer of regulated products such as timber furniture, furnishing, cabinetry, components, product and processors of Australian grown logs can assess any risk that the product contains illegally logged timber.

The gathering of information should not be an onerous process. Businesses should be able to use existing systems, practices and processes to gather the information to allow them to assess the risk.

The Act and Regulation recognise there are a range of circumstances that may make it difficult, to gather each element of the required information. Importers must be able to demonstrate that they have made reasonable efforts in seeking to
obtain the information.

Note: if the required information is not available it may be very difficult to conclude that the risk is low. Just because it is not practicable to gather all the information doesn’t translate to the risk being low particularly if the product is coming from areas where illegal logging is a known issue.

The information gathering process may be complex for importers of furniture, furnishing, cabinetry and components because there may be several different species from several different countries contained in the product. The process needs to be carried out on each different component of the finished product so that a complete assessment of the risk can be established.

3.3 Risk Assessment

Once the relevant information is gathered the importer or processors must use this information and any other relevant information they know or reasonably ought to know to assess the risk that the product contains illegally logged timber prior to importation or processing of the product. This information should be followed up to confirm its validity. Appendix 4 provides some links to potential sources of other relevant information.

There are three pathways that can be used to carry out the risk assessment on a regulated timber product. They are:

Timber legality Framework
Country Specific Guideline (for use by importers)/State Specific Guideline (for use by processors of domestically grown logs.)
Regulated risk factors.

The pathway that is used for the risk assessment is at the discretion of the importer or processor.

A timber legality framework is a 3rd party scheme that certifies among other things that the timber has been harvested within the legal framework of the country. It doesn’t however guarantee that the timber is legal. PEFC is an umbrella organisation that allows countries to develop their own certification scheme under that umbrella. As such the scheme may be called different things in different countries.

For example in Australia the scheme is called “Responsible Wood”. The regulation recognises PEFC and FSC as suitable timber legality frameworks to assess risk against. There are other timber certification schemes but they are not recognised by the regulation.

Country specific guidelines provide details to assist importers better understand the legal framework in that country and how they can minimise the risk of importing illegal timber product from that country. Country Specific Guidelines are available on the Departments website at: http://www.agriculture.gov.au/forestry

State Specific guidelines are for the use of processors of domestically grown logs. They provide details of the requirements to harvest timber in each state of Australia. The state specific guidelines are located on the Departments web-site at: http://www.agriculture.gov.au/forestry

For importers, more guidance about the timber legality framework or country specific guidelines please refer to Appendix 2 and Appendix 3A respectively. More information is also contained in the Timber Due Diligence Toolkit Document Template. Potential sources of additional general information and information regarding s can be found in Appendix 4.

For processors of Australian grown logs the information about the timber legality framework is relevant to you as well. Information regarding state specific guidelines can be found in Appendix 3B. Information relevant to general information and information regarding regulated risk factors can be found in Appendix 4.

The regulated risk factor pathway is the default risk assessment pathway and is based on risk factors that have been identified by Government as indicators of legality. Once the relevant information is gathered an assessment of the likelihood of risk of the product containing illegally logged timber can be made against these risk factors. Further details relating to the regulated risk factors can be found in Appendix 4.

In this method the following are considered:

the prevalence of illegal logging in the area of harvest.
The prevalence of illegal logging of the species from which the product is derived in the area of origin.
any other known information is considered.

In addition, for imported products the prevalence:

of armed conflict in the area of harvest and
the complexity of the product is considered.

02 - Case Study: Risk Assessment - Timber Legality Framework

The choice of pathway is at the discretion of the importer or processor.

The process of carrying out a risk assessment relies on assessing if the risk factors, and information gathered place the product in the category of low risk or any other potential risk category. The assessment needs to consider all information. In the case of the country specific guidelines or timber legality framework pathways, the risk assessment needs to consider if the product information conforms to the requirements of this pathway and that there is no other conflicting information that has been gathered. If there is no other conflicting or incomplete information, then the risk can be classified as low. If there are no issues identified using the regulated risk factors pathway, then the risk can be classified as low.

The method that is used to carry out the risk assessment is not fixed, for example if a timber legality framework applies to the product the importer or processor can still use another method to assess the risk if they prefer. The assessment and its results, however, must be documented.

Timber furniture, furnishing, components or other complex products may contain timber from several sources. In this case a risk assessment must be performed on each source and if the product/s is being imported as an assembled unit the risk assessment should ensure that each component is low risk. If the product contains timber from several countries the CSG risk assessment pathway cannot be used on the product and alternative methods must be used. A flow chart is included in Appendix 5 which illustrates the process for multi-component products. If low risk cannot be confirmed for all components of the product the product must be classified as having a potential risk (i.e. greater than low risk) and appropriate risk mitigation activities undertaken.

03 - Case Study: Risk Assessment of a Complex Product

More details on performing a risk assessment can also be found in Appendix5.

In deciding whether the requirement of the Legislation have been satisfied you should consider what a reasonable person operating in your circumstances must be aware of. This could include but is not limited to anecdotal evidence from industry traders, information from industry associations, newspaper articles, Non-Government reports and other readily available sources of information.

3.4 Risk mitigation (including for complex products)

Risk Mitigation applies to importers of regulated timber products as well as processors of domestically grown raw logs. Risk mitigation is required when you have undertaken a risk assessment and you have determined the risk to be anything higher than low. Risk mitigation is a process used to lower the identified risk that the product is made from or includes illegally logged timber.

If you are unable to mitigate the risk adequately and proportionately to the identified risk, you must not import the product or in the case of a domestic log processor you must not process the logs.

The Regulation is not prescriptive about what mitigation measures importers or processors should consider or need to undertake. However, the process must be adequate and proportionate to the identified risk.

Risk mitigation measure that could be considered include:

Obtaining more information about the product so that information gaps can be filled or verified.
Carrying out a desktop audit of the supply chain.
Carrying out an onsite audit of the supply chain.
Using a third party to assess the supply chain.
Carrying out an on-site audit of the forest harvest unit
Appointing a third-party auditor to carry out a forest harvest unit audit.
Replacing the supplier with a low risk supplier
Replacing the product with a low risk product.

In general, the risk mitigation step involves trying to gather further information so that the organisation can fill in gaps or answer any concerns that they may have. Further information about risk mitigation can be found in the Timber Due Diligence Toolkit.

Ultimately if the risk of the product containing illegally logged timber cannot be reduced to low the product must not be imported or the log must not be processed, and alternative suppliers should be found that have a low risk of supplying products containing illegally logged timber. The case study below illustrates this point.

04 - Case Study: High Risk

For more information on the risk mitigation process consult Appendix 6 and the AFA’s Due Diligence System Template.

3. Record keeping

The regulation requires records to be kept for a minimum of 5 years. The records that are required are:

The written Timber Due Diligence System Manual
The completed Due Diligence Eligibility Forms–
Information gathered from Suppliers about the regulated timber products
Records of Risk Assessments made against a country specific guideline, a timber legality framework, or the regulated risk factors risk assessment processes.
Records of any Risk Mitigation activities undertaken
Any other records generated during the Due Diligence Process

4. Conclusion

The AFA believes that this short introduction provides the background for importers of timber furniture, furnishing, cabinetry and components or any other regulated timber products with the background information to understand the Illegal Logging Prohibition Act 2012 (the Act) and the requirements of the Illegal Logging Prohibition Amendment Regulation 2012 (the Regulation). The Timber Due Diligence Toolkit allows members to develop the required Due Diligence system to meet their legal obligations.

For Further information contact the Australasian Furnishing Association at www.australianfurniture.org.au