Due Diligence: Not Always an Exact Science23 October 2019
Due diligence is a continuous process, says Xiao Ma, sustainability manager at the Timber Trade Federation
Recently I was sent a BBC video with the strapline, ‘is your wood from a legal source? This test can tell’. The video centred on Isotopic Analysis – which is emerging as a new tool of due diligence – but the main claim of the video, that this test can tell whether your timber was from a legal source, is one some in the timber world would dispute.
Isotopic Analysis compares the Isotopic Signature of a wood product against a database of timber collected from many different locations. This allows you to pinpoint the source of your wood product within a 10km region to “see if it was from legal source”. But I can see why there are concerns. Common comments on the video includes: “We have volume assessed supply chain documentations, visited the factory, examined the timber on site, carried out species test in the past, but my Isotopic Analysis test revealed a likelihood of the timber originating from a different origin, how correct is that likelihood?”
Under the current EU Timber Regulation (EUTR), Operators (the first placer of timber or timber products onto the EU market) are obliged to carry out due diligence to assess and mitigate risks of illegal timber entering their product supply chain.
Here at the TTF, our members are under the scrutiny of our independent auditor each year, to review and monitor its quality and robustness, as part of the TTF Responsible Purchasing Policy.
When it comes to tackling the risks of mixing from unreported species or sources, areas where authentication of origin claim is needed the most, a list of measures should be used, depending on the risk level. This includes supply chain mapping, volume assessment, field-based supplier evaluation, stakeholder consultation, and now – scientific testing to confirm species and origin.
There are multiple variables to be considered with Isotopic Analysis, including how often should testing be carried out, on which product(s) and supplier(s), and how to use it in conjunction with other measures such as field visits? With a cost of around £500 per sample, this may not be an easy decision for some SMEs facing tough competition from their European rivals.
So, it is not a surprise that some would feel a little unease with this BBC message which links failure to pass Isotopic Testing with illegal sourcing. But the underlying question it asks – how confident are you with your due diligence on verifying product claims, is unavoidable. According to a recent research by Forest Trends on government agencies responsible for the enforcement of the EUTR, half of the 21 reported countries are using Isotopic Analysis in their enforcement activities to prove their sourcing claims. Scientific testing is increasingly becoming mainstream, and it is a powerful tool to identify gaps in due diligence. If the testing reveals a location not known to the Operator, this should trigger further review and provide a prompt to address any due diligence gaps where possible.
Here at the TTF, failure to make progress in due diligence will lead to membership cancellation. But due diligence is not a final product, it is a continuous process and there can never be a ‘perfect’ system for everyone, only one which embraces changes to improve.
So, if I may, I would rephrase the question:
How confident are you that your timber product is from the source you believe they are from?
Let’s work together in this continuous journey.