Dominic von Trotha Taylor: Here is how we can combat illegal logging

IN 2022, research from Chatham House found that 15 per cent of all timber exports from 37 exporting countries were illegal, amounting to $19 bn (£15 bn) per annum – resulting in tens of millions of pounds in lost revenues for governments and citizens every year. 

Businesses, individuals and governments find it difficult to determine whether their wood is sourced in accordance with local regulations due to the complexity of international supply networks. 

Illegal logging refers to illegal harvesting, transportation, purchase or sale of timber. This is usually done through corrupt means, gaining access to forests, extracting without permission or from a protected area, chopping down protected species, or extracting timber in excess of agreed limits.

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To combat illegal logging and deforestation, the industry must redistribute pain points and value across the entire supply chain.

But the reality is that the increased due diligence requirements set out by regulations including the European Union Deforestation Regulation (EUDR) can only be truly adhered to if there is industry-wide commitment to change. And iov42’s timber traceability report released last year found that just 26 per cent of respondents across the UK and Europe are fully prepared for it. 

But now the European Parliament has officially voted for the new legislation, with the expectation being that the regulation will come into force later this year. EU-based companies will be required to implement stronger traceability solutions to ensure that their imports and exports are ‘deforestation-free’, or risk the consequences. 

Distributed ledger technology (DLT) is perfectly placed in tracing timber (and other forest risk commodities like soy, cacao and rubber to name a few) back to source, by providing indisputable trust, accountability and compliance across and between supply chains.

A DECENTRALISED APPROACH TO COMBAT ILLEGAL LOGGING AND DEFORESTATION

So what is holding organisations back in adopting DLT? iov42’s timber traceability report found that 56 per cent of respondents had misplaced fears that using traceability technology, such as DLT, could lead to the loss of trade secrets. 

However, DLT actually has a set of permissions that the users can either grant or restrict.

For example, the shipment data only becomes available to the importer once the exporter has established a connection with them and has explicitly shared the shipment data with them. So whilst immutable, no trade secrets are being shared beyond those that need the information. 

The same report also revealed that respondents were worried ever-increasing volumes of data will overwhelm them (48 per cent). However, DLT can record multiple types of data in a time-saving, efficient way, because the need for third-party involvement to store data is eliminated, saving a considerable amount of money, effort, and time.

Many of these issues stem from misunderstanding what DLT (more commonly referred to as blockchain) actually is. The industry is also incredibly fragmented, with widespread bureaucratic, manual processes that are commonly paper-based, perpetuating the industry’s lack of visibility, accountability and trust.

SUSTAINABILITY IN SUPPLY-CHAIN PRACTIcES

The global demand for timber is only expected to continue to rise. With its increasing use in construction, furniture design, and even clothing (to name a few), it is vital that businesses implement the necessary technology now, not only to meet existing and incoming regulations, but also to remember why they were put into place in the first place, and that is to help end illegal deforestation.