Could timber and pulp products become a 'no-go' for EU importers?

The Zoological Society of London warns a significant number of companies may soon be banned from selling products in to the EU as new anti-deforestation regulation comes into force

A scorecard assessing the sustainability credentials of the world’s largest timber and pulp producers suggests the industry is yet to comprehensively measure or manage the significant contributions it makes to climate change and biodiversity loss, despite the companies in question having an outsized influence on the future health of biodiverse and climate-critical tropical landscapes.

The annual assessment of the sustainability efforts of dozens of forest management firms, major saw-milling companies, and large traders of forest-based raw materials was published this morning by the Zoological Society London (ZSL). It found that just two out of 90 firms have a comprehensive biodiversity policy in place.

Swiss tropical hardwood producer Interholco AG and Indonesian pulp and company April Group were the only two companies to be awarded top scores in the ratings, after providing evidence of policies which include measurable targets for tree coverage, habitat restoration, and protection of local wildlife populations. But the biodiversity plans of the overwhelming majority of companies surveyed were found to be badly wanting, despite these companies being collectively responsible for 44 million hectares of tropical forest.

ZSL alert these companies could soon be in for a rude awakening, after EU regulation comes into force that requires European buyers to purchase timber and pulp products from zero-deforestation companies. The report found that just 12 of the assessed companies had introduced a commitment to ensure all their suppliers adhered to zero deforestation standards, despite more than half having an in-house commitment to zero deforestation.

Meanwhile, just nine per cent of companies provided comprehensive evidence they were monitoring the impacts deforestation had on ecosystems, and only 11 per cent reported progress towards commitments to reduce the greenhouse gas emissions intensity of their operations.

Oliver Cupit, program manager of ZSL’s sustainable business and finance programme, said the results from this year’s scorecard were disappointing. “Most assessed businesses did demonstrate some improvements in transparency and sustainability year-on-year, but the overall improvement for the sector was disappointing and companies must be moving much more quickly on their sustainability commitments,” he said.

The charity also stressed that even the more ambitious biodiversity policies, such as those introduced by April Group and Interholco AG, would only prove effective if they were matched by robust on-the-ground monitoring and verification to ensure biodiversity and climate impacts are really being reduced.

Cupit added that pulp and timber companies could soon face intense commercial pressure to enhance their biodiversity policies. He warned that a significant portion of pulp and timber firms may soon have trouble selling into EU markets, where regulation designed to tackle deforestation in supply chains is set to soon come into force.

“The EU regulation on deforestation-free products will soon be in place, requiring EU companies to ensure the products they buy have not led to deforestation in the country of harvest,” he said. “Only half of the companies we assessed have a public commitment to zero-deforestation and just nine per cent show evidence of monitoring deforestation. If the forestry sector does not implement comprehensive monitoring, tropical timber could soon be seen as a no-go by EU importers due to this regulation.”

The results of the assessment exercise have been published on the SPOTT platform, which aims to offer buyers, financial institutions, NGOs, and other supply chain stakeholders’ transparent insights into firms links to deforestation and biodiversity loss. Cupit encouraged EU buyers to use the SPOTT platform as part of due diligence, to identify which actors were proactively deforestation and biodiversity loss so as to ensure they are not inadvertently breaking the new laws.

ZSL has published its report just months before governments around the world are expected to convene in Montreal for the COP15 Biodiversity Conference, where they are expected to hash out the terms of a new global pact to better protect nature. The hope is that a new ‘global biodiversity framework’ will galvanise policies on an international, national, and regional level that slow the destruction of biodiversity around the world, including by slowing the rate of deforestation of tropical forests.

Cupit urged companies to get out ahead of any international agreement and ramp up their efforts to protect nature, noting that biodiversity was being lost “at a rate not seen since the last mass extinction”.

“With a landmark year coming up for nature with the CBD COP15 and UNFCC COP27 [Climate Summit] On the horizon, we are calling on the corporate sector to take biodiversity loss seriously,” he said. “Our SPOTT assessments show that the timber and pulp industry could make a huge difference by creating measurable targets that align with the global targets set at the upcoming conference in Montreal this December.”

ZSL’s annual scorecard is just the latest warning in a string of disturbing reports that highlight how demand for forest-based commodities is hurting the planet. It also adds to the library of studies that highlight how there is still a major opportunity for businesses to turn the dial and deliver massive greenhouse gas emissions savings while also reversing the decline of nature. The bar is currently set low, but the opportunities for progress are therefore significant.

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