Timber and pulp companies have not made sufficient progress towards complying with an upcoming EU law that obliges companies to prove products sold in the 27-nation bloc have not led to deforestation, according to a London-based initiative.

The Zoological Society of London (ZSL) assessed progress made by timber and pulp companies for the EU deforestation regulation (EUDR), which was adopted in June and gives firms 18 months to transition to the new rules.

“Accounting for one-sixth of global trade and over $4 billion worth of tropical timber and wood furniture imports (2022), the EU wields significant influence over global industries and commodity trade. The upcoming EUDR will set the tone for other emerging and existing legislation, such as the UK Environment Act and US FOREST Act”, Sam Ross, ZSL’s sustainable business project analyst said in a statement.

According to the research, some 13.3% of EU timber and pulp companies are monitoring deforestation within their own operations, and only 4.3% are able to monitor their suppliers. Under the new rules, suppliers must provide geographically referenced information on the source of the product and evidence of their due diligence processes for reducing risk.

Financial institutions are looking to de-risk their investments in high-deforestation areas.

“We are actively supporting our partners in the timber and pulp industries to enhance their compliance and meet these important regulations. The EUDR aligns with our own commitments, and we view it as an opportunity for the entire industry to progress towards a more sustainable future”, said Robert-Alexandre Poujade, ESG analyst and biodiversity lead at BNP Paribas Asset Management, about the study.

The EU regulation comes alongside increasing global pressure under the Taskforce on Nature-related Financial Disclosures (TNFD) and Science Based Targets initiative (SBTi) for companies to get a grip on their accounting of biodiversity impacts.

However, a lack of financial support for developing countries and supplier companies could hamper tangible progress in the short term. Developing countries remain vocal about the need for increased funding for forest protection.

The ZSL has used this research to make a further call on buyers and financial institutions to support producer companies in meeting the requirements.

By Tom Woolnough – tom@carbon-pulse.com

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