Beware potential supply chain risks

supply chain risks

Members are being advised to carry out additional due diligence to remove supply chain risks from the already high-risk Sarawak region of Malaysia after another high-profile case.

A delegation of NGOs and indigenous leaders including Friends of the Earth and SAVE Rivers from Sarawak met with the UK government and TDUK last month to share concerns relating to the operation of a Malaysian Timber Certification Scheme (MTCS) certified timber company, Samling Plywood, in the Sarawak region.

The indigenous leaders are alleging Samling has ‘failed to properly and openly inform local communities’ about logging in the Upper Baram Forest Area, an indigenous-managed protected forest, and for the lack of due consultation over MTCS certification of timber logged in the forests. An official complaint has also been filed to the MTCS outlining the alleged breaches of its scheme (ref 1, 2, 3).

In June 2021, Samling Plywood filed a lawsuit against one of the NGOs, SAVE Rivers, for its ‘Stop the Chop’ campaign, which publicised the community resistance to their logging (reference 4, 5, 6). This legal action, however, has subsequently been recognized by the United Nations Special Rapporteur [1] as a possible instance of strategic litigation against public participation on the situation of human rights defenders, also known as a SLAPP suit (Strategic Lawsuit Against Public Participation) (ref 7, 8). A request for clarification has been sent to the Government of Malaysia.

Members should be aware of this case and take relevant media and NGO reports into consideration while carrying out their due diligence. The level of deforestation and illegal logging in Sarawak has long been deemed as high risk. Risk assessment conducted by PreferredByNature has identified a wide range of legality risks in timber supply chains in the region related to legal rights to harvest, taxes and fees, timber harvesting activities, third-parties’ rights, and trade and transport.

The case has also raised concerns around how the system of certification schemes ensures the protection of local indigenous people’s rights, especially when it comes to responding and resolving grievances. It is important to remember that certification schemes, although they provide additional risk mitigation measures, are not an automatic ‘green lane’ to meet the due diligence obligations under EU/UK Timber Regulations. The latest EU study on Certification and Verification Schemes in the Forest Sector and for Wood-based Products has identified various limitations of major certification schemes including FSC and PEFC on aligning with the requirements of the Timber Regulations. Importers must conduct risk assessments on any timber materials carrying a certification claim to ensure the validity, applicability and credibility of the claim in relation to their products, especially when sourcing from high-risk regions and countries.

For more information on the ‘Stop the Chop’’ campaign, please check SAVE Rivers and Friends of the Earth.

Note: TDUK is running regular webinars and one-to-one training sessions to inform members about UKTR and Due Diligence. Please contact us (info@timberdevelopment.uk) for the next available dates.

[1] The special procedures of the Human Rights Council are independent human rights experts with mandates to report and advice on human rights from a thematic or country-specific perspective. https://spcommreports.ohchr.org/