More than 3.5 million hectares of Ukrainian forests have been tied up in Russia’s invasion of Ukraine – with massive deforestation in the Putin-occupied east, coupled with excessive cutting in the west, creating a whole range of European headaches just months out from the EUDR.
It comes as Ukrainian sources now report that Russian armed forces are escalating the trade of thousands of cubic metres of illegally logged timber through Eurasian “friendly countries” by rail and sea:
“The policy of the Russian occupier is to destroy all life wherever it sets foot…In the Donetsk region, the enemy, in cooperation with local collaborators, is now conducting massive deforestation.”
Ukrainian Centre of National Resistance (or UNN) after reporting that 60,000 hectares of forests in the east are now on fire after a renewed attack from Russian forces.
Wood Central has reported for several months that Russian forces, in collaboration with corrupt local officials, have been cutting down and selling timber into global markets (and back into Europe via Belgium, the Netherlands, and Poland) through China and a block of nine countries including Kazakhstan, Belarus, Uzbekistan, Iran, Kyrgyzstan, the United Arab Emirates, Azerbaijan, and Tajikistan.
And with China, responsible for more than 40% of timber furniture entering the EU, refusing to share geolocational data amid “security concerns,” environmental groups have raised alarm that a portion of the more than 120 million tons of timber in Europe, with no official certificate of origin, could be coming from areas like the Chornobyl Exclusion Zone.
But it’s not just the Russian conflict that is causing problems for the EUDR.
In June, Wood Central reported that Ukraine – Europe’s second-largest timber furniture import market behind China – is scaling up logging and timber production to revive its war-torn economy.
Already, the Zelenskyy administration has introduced new policies, including Resolution No. 454, vowing to ramp up timber processing in the controlled (west) over the next year three years. And whilst timber processing made up just 1.2% of the country’s GDP in the years leading up to the invasion:
“That all changed when the invasion started, with the Ukrainian Government declaring its intention to increase logging in controlled territory,” said Yehor Hrynyk, Andrii Biletskyi, Amanda Cabrejo le Roux, co-authors of a Basel Institute of Governance Report published last year.
According to the WWF’s Ukrainian bureau, the new policy risks making Ukraine a “high-risk” country as defined under the EUDR’s terms and definitions, threatening its economic integration into the EU.
Svitlana Kuts, the WWF-Ukraine Director, said, “There is a risk that the new regulation will unjustifiably increase felling and corruption in the industry.” Before adding, “The new version contradicts Ukraine’s European integration obligations and exacerbates the likelihood of further international scandals in the case of timber harvesting.”
For Yuliya Ovchynnikova, a Ukraine member of the Alliance for Liberals and Democrats for Europe and opposition to the Zelenskyy government, the new resolution poses a significant risk to Ukraine’s trade with the European block – Ukraine’s largest trading partner for forest products.
“The new EU regulation on deforestation – EUDR – will enter into force next year, with timber harvested in an illegal and unsustainable way will not be allowed on EU markets,” with “the more problem logging, the worse the country’s status from the point of view of the EU.”
“If Ukraine falls into a high-risk zone,” Ms Ovchynnikova said, “it will be a problem for woodworkers. They will be forced to conduct lengthy and costly additional inspections by independent experts.”
Can blockchain technology address furniture supply chain concerns?
Last week, Wood Central spoke to iov42, a global blockchain company that has launched Interu—a fully traceable, “best of breed” technology solution tailor-made for global deforestation; who said furniture is one of the areas most at risk of EUDR compliance.
According to Anna Roberts, the head of market development for iov42, who is now working with the EUDR, the UK Environment Act, the US Forest Act, and the Japan Clean Wood Act, “the top 10 furniture companies are probably all getting their wood from the same sawmills…so why do they all need to do their own separate due diligence?”
“Ultimately, it comes down to traceability and transparency. Is the supply chain willing to share that geolocation analysis with a competitor? That’s something that (companies like) Interu can facilitate,” Ms Roberts said, adding that many of the challenges in enforcement come down to the technology used to make economies EUDR-ready.
“The real problem is data; how can we collect it at scale, share it across very complex and often less trustworthy networks, and how do you trust that data?” With technologies addressing a “compliance ticking time bomb” forecast to cost importers more than US $2.5 billion per year.
“We need best-of-breed technologies, including earth observation, remote sensing, satellite imagery, and even DNA-testing or products,” to get a fit-for-purpose solution that can work for the total supply chain.
How the EUDR will work
- The regulation will assign regions within countries inside and outside the EU a low, standard, or high-risk level associated with deforestation and forest degradation.
- This risk classification will guide the obligations of various operators and the authorities in member states to perform inspections and controls. Consequently, this will streamline monitoring for high-risk regions and simplify due diligence processes for low-risk regions.
- Authorities responsible for these areas must inspect 9% of operators and traders dealing with products from high-risk regions, 3% from standard-risk areas, and 1% from low-risk regions. This inspection aims to confirm whether they are effectively meeting the obligations stipulated by the regulation.
- Further, these competent authorities will inspect 9% of relevant goods and products either placed on their market, made available, or exported by high-risk regions.
- Lastly, the EU plans to enhance its cooperation with partner countries, focusing primarily on high-risk areas.
For more information on EUDR and its impact on global furniture supply chains, visit Wood Central’s special feature on EUDR and its implications for the European supply chain for timber-based furniture products.
