Some companies try to organise their EUTR compliance themselves. Compliance with the European Timber Regulation can even be done on paper. But it makes much more sense to operate the necessary processes digitally and automatically
In principle, it does not take much to comply with the EU Timber Regulation. After all, if you look at it superficially, it “only” requires:
- That you collect information on the type of wood (species), the country of origin and the quantity traded. These are usually already on the invoices.
- An assessment of whether valid legislation has really been complied with during logging. This is also required by the EUTR. Likewise, an assessment of how reliably the regulations in the countries of origin or by the local partners are really complied with. This is where it gets a bit more complex…
- A plan for how to react if you have indications that there are non-negligible risks in your own supply chain. This is – at first glance – almost a no-brainer. Or is it?
Looking at it this way, one could say: Where is the “problem” in complying with the EUTR? Why do many companies think that they cannot simply manage the complexity of the EU Timber Regulation themselves? Let us take a practical experience of one of our clients for this…
EUTR compliant once – but still not safe?
Specifically, this concerns a large company that has already taken EUTR compliance into its own hands since its introduction in 2013. The peculiarity: there was even an early audit. And the authorities found everything OK at that time.
So for our (then not yet) client, all was well with the world. One could calmly continue exactly as before. At least that’s what those responsible thought. Because in 2021, the company was audited again for the EUTR. And during this audit it turned out that a lot had been done wrong. Heavy fines (up to 50,000 euros per product) were suddenly imposed.
“This has caught us cold. Of course we want to be compliant, and we have done a lot to achieve this. But forest law is not our core business. We would prefer to concentrate on contact with our customers and for the rest we now get help from GTS.”
This is how a responsible person from the company put it to us. Rightly so, we think. But to understand this, let’s take another look at what the complexity of EUTR compliance is in detail … and where the sources of risk of a failed audit can be found.
RISK 1: You don’t just need any documents for the respective types and quantities of wood. You need the right ones.
Surely an invoice is enough for that? Yes and no. Because the EUTR requirements in this respect distinguish, for example, whether you are doing a domestic transaction or an international transaction. Moreover, you do not only need an invoice, i.e. a commercial transaction element. You also need a physical transaction element about the transport. Plus proof of proper registration of the supply chain participants in their country.
RISK 2: You need to know what requirements apply where.
Actually, to comply with the EU Timber Regulation, you only need a logging permit or a management plan? In principle, that is true. But not in detail. In some countries, for example, such logging permits do not exist at all. This may be because forests there are state forests, for example, and are regulated differently. How is it in China? In Vietnam or India? As you can see, this is where it gets complex and difficult. Even if you know which permits to look for.
But if you don’t know exactly because you are not an expert in this field, it becomes almost impossible to identify the right documents. Not to mention any language barriers in validating the documents…
RISK 3: You need to be up to date
Unfortunately, it gets even more complex. For EUTR compliance, you not only have to know the legislation and the necessary documents in the various countries. You also need to know when things are changing. If, for example, China or another country of origin of wood adapts the national regulations, you have to react to it practically immediately. That may still be feasible for one country (if you have the technical and legal competence to do so). With two or three, too. But with dozens of countries of origin, it is rather impossible for non-specialists.
RISK 4: You need to verify documents
This is not a trivial process either and it can take a lot of time and knowledge. Nevertheless, ignorance does not protect you from penalties here. Because you have a duty to actually verify documents.
RISK 5: You must assess risks correctly and act when necessary
This is the most complex of all steps. For example, how are you supposed to check from Germany how trustworthy or reliable the information from the supply chain – and this may well go through 4 to 5 stages – is? And what are the right measures to take if you discover that something is risky?
Do you do your tax return yourself? So why should you do it for EUTR Compliance?
In tax matters, a separate department in the company or a tax consultancy firm makes life easier for you. It can be the same with the EUTR Regulation. Because all you really need is the right tool. And that is one that automates and professionalises the entire process. Then you have all the strings in your hand and are safe from unpleasant surprises during audits.
Three questions – and everything is settled. Can it really be that simple?
Imagine that you only have to answer three questions about each of your products. Namely these:
- What species of wood is used in my product?
- From which country of origin does it come?
- What is the function of a company in the supply chain?
If you answer these questions in RADIX Tree – our tool for EUTR compliance – you have as good as laid the foundation for your due diligence. Because RADIX Tree now automates the identification of the right documents for the product that needs to be risk assessed. RADIX Tree integrates the necessary know-how with the technical implementation of an automated risk assessment. In short: RADIX Tree is the safe, efficient and cost-effective solution to meet your EUTR compliance requirements. Just like the above-mentioned client is doing by now…
User friendly platform to connect your supply chain
Expert designed templates to comply with the new law
Automated analysis tools to rate your suppliers
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Need more info? Our complete guide to the EUTR >>