Due Diligence for Illegal Logging: What You Need to Know

Illegal logging is a problem that affects the environment, social, and economic systems around the world. The Australian government has implemented several measures to combat illegal logging, including the Illegal Logging Prohibition Act 2012, which prohibits the importation of illegally logged timber and wood products. Through due diligence systems, the risk of illegally logged timber in supply chains is reduced. Despite this, importers continue to be found negligent in conducting due diligence against illegal logging. Find out what you need to know about minimizing the risk of illegal logging, regardless of whether you import or export.

What is Due Diligence?

Due diligence refers to the procedures businesses use to make sure they are importing legitimate wood in the timber industry. The basic idea here is that companies should be able to provide valid documentation regarding the timber in their products, from harvest to processing. Furthermore, they must be able to demonstrate that they are assessing and mitigating the risks associated with illegal wood entering their supply chains.

What Goods are Regulated?

Under the Illegal Logging Prohibition Regulation, importing or processing timber and timber products that have been illegally logged is a criminal offence. It applies to all timber and timber products imported into Australia as well as all domestically grown logs that are processed in the country.

The following goods are covered under the guidelines:

• Wood and Articles of Wood  
• Pulp of Wood
• Paper and Paperboard and Articles of Paper/Paperboard
• Furniture

What is my responsibility as an importer?

The primary goal of any importer is to ensure that they do not import products that include illegally logged timber. During the importation process, an importer is required to gather information, evaluate whether the timber product they are importing has been obtained illegally, and, if it is possible, take reasonable steps to reduce the likelihood of this happening. They will then need to make a declaration to Customs about their compliance with the due diligence requirement.

A guide for importers has been provided by the Australian Department of Agriculture, Water, and the Environment on how to set up and conduct due diligence before importing any regulated timber product into Australia. There are essentially 5 steps to the process:

1. Develop and maintain a due diligence process
2. Gather all information about the timber in the product
3. Conduct a Risk Assessment. There are three options for evaluating the risk as provided under the guidelines:

• Certification under either the Forest Stewardship Council (FSC) or the Programme for the Endorsement of Forest Certification (PEFC) (Timber Legality Frameworks), or
• Risk assessment using Country Specific Guidelines (CSGs) or State Specific Guidelines (SSGs), or
• Regulated risk factors

4. Reduce the risk when there is a substantial risk identified
5. Keep written records

An importer who fails to comply with the Australian Department of Agriculture’s due diligence requirements may be liable for penalties of up to 100 penalty units (AUD22,200 for individuals and AUD111,000 for incorporated entities as of April 2022). The law also allows for civil and criminal prosecutions of non-compliant importers and processors. 

Where Can I Get More Information about Due Diligence?

Importers should review and understand the compliance and enforcement information provided on the website of the Department of Agriculture and Water Resources. If you need further assistance or information about setting up and managing illegal logging due diligence, please do not hesitate to reach out to your McHugh Eastwood Team.