Due diligence for importers

Before you import a regulated timber product, you must have a written due diligence system that lists the steps you are going to take to minimise the risk of importing illegally logged timber products.

Your due diligence system must include:

1. Your details, including: business name (if applicable), street and postal address, contact number and email address.
2. If you import as a business, your ABN/ACN and a description of your main business activity.
3. The name of the person in charge of the due diligence system, and their contact details.
4. The steps you will take to minimise the risk of importing illegally logged timber.

Your due diligence system should be easy to understand and follow. It will help you make decisions about how to act each time you import a regulated timber product.

The department has published a guide for establishing a due diligence system for importers.

If you change your due diligence process, you should also update your due diligence system.

If you are audited you will be asked to provide a copy of your system to us for review, which will be assessed for compliance against section 9 of the Regulation.

Before you import a regulated timber product, you need to attempt to gather information about the timber in the product concerning the risk of illegal logging.

You need to gather as much as reasonably practicable of:

• The type and trade name of the product you are importing.
• The name (common or scientific) of the tree the timber has come from.
• The country, region and harvesting unit from where the timber was harvested.
• The country where the product was manufactured.
• The quantity of product being imported (in volume, weight or number of units).
• Details of your supplier, including name, address, trading name, and business identification numbers.
• Documents provided by your supplier for the product’s purchase.
• If a Timber Legality Framework (PEFC or FSC) applies to the timber, a copy of the applicable licence or certificate.
• If a Country Specific Guideline applies to the timber, the information relating to the product that the document requires importers to obtain.
• Further evidence that can demonstrate the timber was not illegally logged including, but not limited to:
  • whether harvesting is prohibited in the source location
  • whether legislative requirements concerning the harvest of timber were met
  • whether payment was made for the timber harvesting rights (where applicable)
  • whether harvest was consistent with use and tenure rights (where applicable).

Many of the details about the products may be found in existing commercial documents, contracts, or invoices. However, you may need to work with your supplier to gather more information, documents, or evidence.

Additional resources are available to assist with gathering further contextual information, such as legislative harvesting requirements in the source location.

How you gather the necessary information is up to you. This could include phone calls, emails, online research or questionnaires sent to suppliers, among other approaches.

The law requires you to gather as much of the above-listed information about the product as it is ‘reasonably practicable’ to obtain. In determining what is reasonable, you should consider: the availability of the required information; the time, expense and difficulty in gathering the information; and the steps required to gather the required information.

If you can’t answer basic questions about the timber in your product, and where it has come from, it will be difficult to conclude that the product is low risk (see Step 3).

If audited, you will need to show that you have obtained as much information as was reasonably practicable to. You must keep a record of your efforts, and any information you find, for at least five years after the import date.

Once you have completed Step 2, you need to use the information you have gathered to conduct a risk assessment.

Australia’s illegal logging laws provide three methods to do this:

• Timber Legality Framework (TLF) risk assessment
• Country Specific Guideline (CSG) risk assessment
• Regulated Risk Factors (RRF) risk assessment

You need to use one of these methods to carry out your initial risk assessment. Further information on each of these methods is provided below. We have also provided comprehensive risk assessment templates below to guide you through each of the steps involved in applying each method.

The method that you use will depend on the circumstances surrounding your timber product. However, the first two methods can only be used where your product(s) meets certain requirements. The third method can be used in all circumstances.

Each method requires you to come to a risk conclusion. You need to consider all the information you know of, or should know. This means you cannot ignore relevant information when coming to your risk conclusion.

This includes assessing all information gathered in Step 2. Consider:

• Have you been able to obtain sufficient information to inform your risk assessment?
• Does the information cover all timber components (including any paper components) of your product?
• Do the classification of species, quantities, and qualities match across the documentation?
• Can the claims made in the information gathered be verified with evidence?

If you have been unable to obtain enough information about the species of timber and where it has come from, it will be difficult to conclude that the product is low or nil risk.

Your risk conclusion needs to be reasonable and supported by the information that you have gathered. If audited, you will be asked to justify your risk conclusion.

If after completing the risk assessment, you conclude that your product is low or nil risk, then you can move to the record keeping step and finalise your due diligence steps for the import. However, if you have assessed the risk as greater than low, you will need to take further steps before this. If you used the Timber Legality Framework risk assessment method or the Country Specific Guidelines method, you must complete a subsequent risk assessment using Regulated Risk Factors. If the risk is still greater than low, you must take the risk mitigation steps set out in Step 4 (see below).

You can use this risk assessment method when the regulated timber product(s) you are importing are certified under the:

• Forest Stewardship Council (FSC), or
• Programme for the Endorsement of Forest Certification (PEFC)

This method recognises that the FSC and PEFC certification schemes provide rigorous forest management and chain of custody standards that consider risks of illegally logged timber.

You may encounter documents or claims from other non-FSC or PEFC accredited forest certification schemes. While they can be used to support a risk assessment using Option 3C, they cannot be used under the timber legality framework method.

A common mistake is assuming that your products are certified because your supplier or someone else in the supply chain is certified. A certified business can still deal in non-certified products. There is also a risk that your supplier may be falsely claiming their products are certified.

If you find that your supplier or product is not certified, you must choose a different risk assessment method (see option 3B or 3C).

How to use the TLF risk assessment method

When using this method, there are five steps you need to follow:

1. Check the supplier’s certification number
2. Check if the certificate is valid for the period of supply
3. Check if the products or species being supplied are listed
4. Check if the product is certified
5. Consider any other information that may indicate illegality of harvest

If you can confirm that the timber is certified and are not aware of any other information that suggests the product contains illegal timber, you can assess the risk as low or nil and proceed to the subsequent due diligence steps.

We provide a comprehensive TLF risk assessment template below that guides you through each of these steps. We encourage you to use this to assist you when using this risk assessment method.

You can use this risk assessment method when you are importing products that have been wholly harvested in and directly shipped from a country with a Country Specific Guideline (CSG).

CSGs are documents that have been negotiated by the Australian Government with key trading partners. They help you understand:

• the legal frameworks that regulate timber harvesting in these countries
• relevant documents (certificates, licences, etc.) you should obtain to demonstrate harvest legality

The CSGs may also provide helpful information on timber transportation, processing, and export approval processes.

How to use the CSG risk assessment method

In using a CSG to conduct your risk assessment, there are four steps to follow:

1. Decide if a CSG applies to the product you are importing
2. Assess the information you have gathered against the CSG
3. Consider any factors that the CSG may not account for
4. Consider any other information that may indicate illegality of harvest

We provide a comprehensive CSG risk assessment template below that guides you through each of these steps. We encourage you to use this to assist you when using the CSG risk assessment method.

Case study

Rio wants to import a range of paper bags for a conference she is organising. The paper bags will be imported from Country A, which has an existing Country Specific Guideline (CSG). However, after speaking to her supplier, she realises the wood-fibre in the bags was harvested in a different country. As a result, she is unable to use the CSG for Country A. Rio must now determine if she will use the Timber Legality Framework or Regulated Risk Factors methods to conduct her risk assessment.

Case study

You can use this risk assessment option for regulated timber products from any source or background.

If you have completed a risk assessment using the Timber Legality Framework method or the Country Specific Guidelines method, and assessed the risk as greater than low, you must complete a subsequent risk assessment using Regulated Risk Factors.

By using the risk factors, you should be able to make a reasonable determination of whether your product is likely to include illegally logged timber.

How to use the RRF risk assessment method

There are five key steps to this method:

1. Consider the prevalence of illegal logging in the area in which the timber in the product was harvested
2. Consider the prevalence of illegal harvesting of the species of tree from which the timber in the product is derived
3. Consider the prevalence of armed conflict in the area of harvest
4. Consider the complexity of the product and the supply chain
5. Consider any other information that may indicate illegality of harvest

If you have assessed the risk and decided that your product is a low or nil risk of being illegally harvested, you have completed your due diligence risk assessment. You must document your risk conclusion and meet your record keeping requirements.

If you have assessed the risk as greater than low, you must take additional actions to mitigate the risk before you are able to import the regulated timber product. This is explained in Step 4 (below).

We provide a comprehensive RRF risk assessment template below that guides you through each of these steps. We encourage you to use this to assist you when using the RRF risk assessment method.

Case study

Maja is using the Regulated Risk Factors method to conduct a risk assessment on notebooks she wants to import. Working her way through the risk factors, Maja uses an online conflict map to confirm there is no armed conflict in the area of harvest. She also uses several online third party resources to research if illegal logging is currently a problem in the area of harvest, and if the species of wood-fibre contained in her notebooks is regularly illegally logged. Maja finds nothing to suggest the timber in the notebooks may have come from illegal sources. Drawing on this research and the information she originally gathered from her supplier in Step 2, Maja concludes her product is low risk. She records a low risk conclusion and imports the notebooks.

If you are not able to conclude that your product is low or nil risk, after assessing the risk via the Regulated Risk Factors method, you need to take reasonable steps to reduce the risk before you import the product.

How you mitigate the risk is up to you. It will depend on your individual circumstances.

You may need to do more research, such as:

• ask for more evidence or information from your supplier
• ask your supplier for a certified alternative
• visit your supplier to learn more about their supply chains
• start a regular audit process, such as a detailed supply chain audit or onsite supplier audit

Your risk mitigation may involve not importing the product. In some cases, you may need to consider sourcing a lower risk product, or even changing suppliers.

Regardless of the steps you take, your mitigation efforts need to be adequate and proportionate to the identified risk.

Once you are satisfied that you have reduced the risk to a low level of containing illegally harvested timber, you must keep records to show the steps you have taken.

If you were to import any product(s) that are later found to contain illegally logged timber, you could face serious penalties.

You must keep records covering all the steps you took in the due diligence process. This includes records of all information and evidence gathered as part of your due diligence. Records can be kept digitally or on paper. They must be maintained for at least five years after the import date.

Your records should clearly state:

• your due diligence system (Step 1)
• the information gathered (Step 2)
• your risk assessment process and conclusion (Step 3)
• any ways you attempted to reduce the risk (Step 4)

We may audit your records. Learn more about our compliance audits.

No. You do not have submit your due diligence information to the department each time you import a regulated timber product. However, this information must be provided to the department, if requested for compliance purposes, and you must keep a written record of your due diligence process.

The legislation requires that each time an importer imports a regulated timber product, they complete the due diligence process set out in Part 2, Division 2 of the Regulation. Where an importer has previously imported the product, they must first verify that none of the information relating to the product previously gathered, or required to be gathered under section 10, has changed. This could include the harvest location, product certification number or outbreak of conflict in the harvest region for example. A record of having done this must be created that references to the original due diligence assessment process relied upon.

Where no changes have occurred, importers can utilise the previous risk assessment and mitigation process undertaken for the product, and keep a record of having done this. Where any element has changed, the importer must repeat the risk assessment and mitigation steps at sections 11 – 14 of the Regulation, and keep records of having done this.

The same process applies for processors under the respective sections of the Regulation each time they process timber.

No. While such a statement can help inform your risk assessment, it is not sufficient evidence to satisfy your due diligence requirements.