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Guidebook on Due Diligence by the Philippine Timber Associations

Since 2015 the Chamber of Furniture Industries of the Philippines (CFIP) has been working to help companies meet international market requirements.

Do the right thing and prove it!

The Guidebook on Due Diligence by the Philippine Timber Associations is step-by-step tool to help companies demonstrate compliance to the rules and regulations in the Philippines.

This due diligence guidebook on timber chain-of-custody identifies legal requirements for locally sourced timber and the legality of mills to which these raw materials had undergone processing. The guidebook also defines the chain-of-custody of raw materials which starts from the forests or plantations, to the mills and throughout the processing and production points of finished products. It also provides risk assessment in purchasing imported timber, and is applicable to non-timber raw materials such as rattan, abaca, buri, among others.

The sustainability of the Philippine timber industry is our long-term goal.

Since 2015 the Chamber of Furniture Industries of the Philippines (CFIP) has been working to help companies meet international market requirements.

Do the right thing and prove it!

The Guidebook on Due Diligence by the Philippine Timber Associations is step-by-step tool to help companies demonstrate compliance to the rules and regulations in the Philippines.

This due diligence guidebook on timber chain-of-custody identifies legal requirements for locally sourced timber and the legality of mills to which these raw materials had undergone processing. The guidebook also defines the chain-of-custody of raw materials which starts from the forests or plantations, to the mills and throughout the processing and production points of finished products. It also provides risk assessment in purchasing imported timber, and is applicable to non-timber raw materials such as rattan, abaca, buri, among others.

The sustainability of the Philippine timber industry is our long-term goal.

 

 

 

Supporting due diligence documents to download:

Administrative Procedures

Compliance Monitoring Protocols

OUR PROJECT

Sustainable and ethical business practice is also the ability to prove legal compliance.

Competitiveness is about offering the markets around the world the best price for the highest quality products made through sustainable and ethical business practices.

The European Union Timber Regulation, the Lacey Act of the USA, the Australia Illegal Logging Prohibition Act and the Japan Goho Wood & Clean Wood Act all mean that exporters who enter their markets must to show legal compliance of the timber and timber-based products that enter they bring in.

Companies who can demonstrate compliance through a simple and transparent way have market advantage. Thus, the Food and Agriculture Organization of the United Nations has been supporting the private sector in the Philippines, through CFIP, to develop a tool and mechanisms for industry players to show compliance to Philippine laws.

How was the Guidebook developed?

Identifed Key Legislation

We concentrated on the identified legislation at each point in the timber trade chain and developed a checklist of the range of documents and licenses that are required at each points in the chain.

Developed Verification Tools & Systems

Meticulous clients require credible information about the processes and raw material used in making the products they purchase. We have developed systems for companies to present these information in a simple way for their clients to check.

Management & Make Accessible The Verification Process:

Solving a problem of many enterprises, especially the small and medium, in finding ways to carry out assessment of their activities and putting in place necessary systems to show compliance to legal requirements.

We are working with with members of CFIP and the Philippine Wood Producers Association (PWPA), among others, to ensure relevance and easy access of this Guidebook tool for all players in the timber industry.

RESEARCH AND DEVELOPMENT

Consultants checked the systems in place during factory visits

Project Title: Updating and Testing the Chain-of-Custody (CoC) Guidebook: Advancing the Voluntary Due Diligence Process

In 2015, CFIP and PWPA (Philippine Wood Producers Association, Inc.) conducted a review of the legal requirements that exists in the different sectors of the forestry and timber industries in the Philippines. This involved a comprehensive cross-section study of these sectors in the context of legality in the country and an understanding of the importance of raw material traceability as requirement from companies as they engage in business in the world market. The review resulted to a draft checklist of the rules and regulations that control the timber industry sector in the Philippines. A draft guidebook entitled,“Guidebook on Requirements for Chain of Custody Systems and Monitoring Compliance in the Philippines”, was thus published, along with its pocket version, and distributed throughout the sector and used by the companies as reference in dealing with their clients.

The Guidebook has been used as reference tool by companies for some time, and then it was revised based on the users’ experience of the systems introduced for assessing compliance and encouraging them to undergo legal verification process. Further, an external reviewer and an extensive review by Philippine government agencies ensured that the systems in the Guidebook is relevant and in line with the current initiatives of the government. The data from users’ experience, the reviews and the identified additional compliance requirements by regulating bodies in the international market were consolidated to redraft the checklist, and were used as bases in redesigning the structure of the Guidebook.

In 2018, during the project’s second phase implementation, the redrafted Guidebook underwent field testings in 10 companies which composed of saw mill and plywood mill companies, and manufacturers of furniture and furnishings in Manila, Pampanga, Cebu and Butuan. Simultaneous to these tests were stakeholder workshops conducted to present the field tests results to those companies, the respective local government agencies and civil society representatives who, in turn, helped further refine the checklist and the systems in the Guidebook to ensure comprehensiveness.

As the project proponents aimed to gather as much information thoroughly and inclusively to make the Guidebook as relevant and useful to stakeholders there will always be areas for improvement, especially since Philippine regulations are often updated. Moreover, when it comes to specific raw materials such as driftwood, difficulties in defining them shall arise and such is beyond the scope of use of the checklist. Even more so, international recognition of the due diligence processes mean for systems to be dynamic and the processes therein be constantly under review.

Besides achieveing to finish the development of Guidebook the field tests also enabled the consultants to see how close the companies have been in terms of their compliance. Companies from other Southeast Asian countries such as in Indonesia, Malaysia and Vietnam have long been working on their compliance issues and they have invested more in these aspects. Thus, we may easily conclude that products that came from these countries are much more compliant and that they have an advantage over Philippine products in terms of marketability in the ever increasing environmentally conscious market.

Findings from the Field Test Research

The results of the field tests did show nicks in the actual due diligence of timber chain-of-custody by companies. There have been no accustomed systems in recording and transfering information about the origin of timber throughout the supply chain, which is an issue that needs to be addressed. However, in the aspect of the internal controls within each factories such as in management, raw material control and traceability, the standards were high and, in many cases, the companies have met the requirements of due diligence process.

The majority of legal requirements in the Philippines are clear and conducive for business but there exists a framework of legislation and licensing that have been quite a burden to the sector. For the private sector it is a drawback that sometimes companies have difficulty in securing necessary licenses and documentations from government agencies in a timely and consistent way.

Moreover, constant problem exists in tracing the locally-sourced timber from the origin as the information that came from the plantations and the saw mills gets lost — thus having a break in the chain — as the trader never passes the information to the downstream manufacturers. The result is often that even though domestic plantation timber such as Honduran Mahogany or Acacia may be “low risk” in any due diligence assessment there is insufficient data to demonstrate the compliance of companies who bought them in which will be a consistent problem for the industry.

The field tests’ goal was to test the due diligence compliance system under development rather than audit the individual factory operations. Findings have showed, however, the levels of compliance on the level of each individual companies, wherein it demonstrates that it is possible for much of the Philippine timber industry players to be able to comply with the international requirements without having to make major adjustments on their current operating systems. There are steps that need to be taken to strengthen the system of each companies but overall any operation that has impelled itself can comply.

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Chamber of Furniture Industries of the Philippines, Inc.

3rd Flr. RONAC Living Gallery, Lot 15C, Block 18, Shaw Blvd. 1558 Mandaluyong City, Philippines
www.cfip.ph
E-mail :  rawmaterialtracker@cfip.ph
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