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Beyond legality: The social, environmental and economic benefits of FLEGT-licensed timber

The question whether FLEGT-licensed timber should be considered “a step backwards” compared to timber certified by voluntary third-party schemes was frequently raised as a part of IMM 2017 interviews. It’s a difficult question to answer at the global level, as the Voluntary Partnership Agreement (VPA) process determines legality rather than sustainability per se. There is, however, a measure of common ground between the various VPAs currently being implemented or under negotiation and some unique achievements under the VPA process that show that FLEGT-licensed timber is “more than just legal”.

The EFI FLEGT Facility summarized key aspects of this below:

“FLEGT-licensed timber products are primarily known for their verified legality. Less well-known are their sustainability credentials. But the trade in these products, and the policy reforms and sectoral improvements that stand behind the licences, are helping ensure that forests contribute to economic growth and poverty reduction, while promoting sustainable forest management. Also, the process that makes licensing possible has positive impacts on democracy and justice, jobs and welfare, peace and security, climate change and biodiversity conservation.

FLEGT-licensed timber and timber products can only come from countries that have implemented a Voluntary Partnership Agreement (VPA) with the EU. In 2016, Indonesia became the first country to issue FLEGT licences, ahead of another 14 countries in VPA processes. Key aspects of the sustainability credentials of FLEGT licensed products are outlined below.

1. FLEGT licensing operates at the scale needed for sustainability

FLEGT licensing operates at the national scale, covering all forests where trees are harvested, and entire supply chains from the point of harvest to the point of export. Operating at the national scale means putting in place systems that ensure that all forests in a country are managed in accordance with the relevant national legislation and that all operators comply with social and environmental laws. The licences attest to compliance with laws related not only to forest management, biodiversity conservation and harvesting but also to processing, transport and trade, covering aspects such as workers’ rights, payments of fees and impacts of forestry operations on local communities or indigenous peoples. As opposed to initiatives that aim at certifying only individual forest areas or operators, this approach raises standards across the entire forestry sector, helps level the playing field and creates the economic space companies need to improve sustainability. In most cases, VPA countries have chosen to apply the VPA to all timber in the country, covering all exports regardless of their destination, as well as timber destined for the domestic market.

2. FLEGT licensing supports all three pillars of sustainability

FLEGT-licensing brings measurable social, economic and environmental benefits — bolstering the three pillars of sustainability. The licences attest that forests are managed in line with legal requirements, particularly on forest management and biodiversity conservation, and that logging rights have been legally granted and that timber has been legally-harvested. Where tenure- or use-rights to land and resources that may be affected by timber harvesting exist, the licences verify respect for those rights. They confirm that timber and timber products comply with requirements regarding forest management, including with relevant environmental, labour and community welfare legislation. They also confirm products comply with requirements for trade and export procedures, and that relevant taxes and fees have been paid. FLEGT licensing verifies compliance with legal requirements that stakeholders say are needed to ensure sustainable forest management. Stakeholder participation in defining these requirements helps ensure they are comprehensive. Increased awareness of laws, together with any legal reforms ahead of FLEGT licensing, help ensure the laws are respected in the long-term.

3. FLEGT licensing follows transformative changes to governance without which country-wide sustainability is not possible

As part of the process of negotiating a VPA with the EU, as well as the process to develop the timber legality assurance systems required to issue FLEGT licences, partner countries establish national multistakeholder processes to discuss and undertake legal and policy reform to address the underlying governance challenges that are a barrier to country-wide sustainability. In doing so, they create the foundation from which countries can work to address the drivers of deforestation, promote sustainable forest management and deliver wider impacts beyond supply chains. Therefore VPAs strengthen and clarify legal and regulatory frameworks. They enhance the capacity of institutions to manage the forest sector and of civil society organisations to monitor it. They help modernise and formalise the forest sector, improving business and operational practices. They also can help improve revenue collection and revenue distribution to communities. They ensure that information on the forest sector is made public and they are negotiated and implemented with stakeholder participation, increasing accountability and transparency. With better governance comes improved conditions for private investment in sustainable forest management.

4. FLEGT licensing improves compliance with a country’s laws

FLEGT licensing is based on detailed indicators and verification procedures. Before FLEGT licensing begins, countries develop robust systems for tracking wood through the entire supply chain and preventing illegal or unverified products from mixing with legal ones. They strengthen procedures for verifying compliance with relevant laws, ensuring that FLEGT licences are only issued to products that are verified to comply with those laws. These systems help to identify actors that are not playing by the rules, and support law enforcement action by the relevant authorities. FLEGT licensing cannot begin until the EU and the partner country have confirmed, through a joint independent assessment, that the country’s systems function as described in the VPA.

5. FLEGT licensing brings unprecedented scrutiny to the forest sector

The credibility of FLEGT licences is further boosted by compulsory annual independent audits to ensure that the systems function effectively and that there is a continuous process of improvement. This a key component of the VPAs. A committee of EU and partner country representatives first approves the audit procedures, which must meet international standards. The auditor then reports to the committee and makes public a summary of their findings and action taken to address them. In addition, independent monitoring by civil society groups can also provide an added layer of scrutiny. The EU and each FLEGT licensing partner country commit in their Voluntary Partnership Agreement to monitor the social, economic and environmental impacts of the agreement and take steps to mitigate adverse effects on groups identified in the VPA — typically indigenous people and local communities.

6. FLEGT licensing benefits from broad national support and reinforces national sovereignty over forest resources

A FLEGT licence verifies that authorities in the country of origin have verified a product’s compliance with all relevant laws and regulations. But the criteria FLEGT-licensed timber must meet to receive a FLEGT licence are not simply imposed by governments. Rather they have been agreed upon by stakeholders from government, businesses, civil society groups and in some cases local communities and indigenous peoples — and then agreed jointly with the EU. This adds to the relevance and credibility of FLEGT licences, builds the nationwide support necessary for compliance, and ensures more oversight and control will be placed on the areas stakeholders deem most important. By being based on national laws and regulations, FLEGT legality standards reinforce national sovereignty over forest resources".

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