The Economy, Land & Climate Podcast

How Europe funds illegal Russian logging, and why timber sanctions matter - with Earthsight's Sam Lawson

March 11, 2022 Economy Land & Climate Insight Team
The Economy, Land & Climate Podcast
How Europe funds illegal Russian logging, and why timber sanctions matter - with Earthsight's Sam Lawson
Show Notes Transcript

With the invasion of Ukraine ongoing, ELCI's Assistant Editor Bertie Harrison-Broninski talks to Sam Lawson, Director of investigative NGO Earthsight, following a public letter from 120 NGOs calling for a boycott on Russian and Belarusian wood.

The public letter was led by Ukrainian environmental groups in response to the invasion, but Earthsight have been investigating illegal and unsustainable Russian and Belarusian logging for years. Their work has exposed major failings of EU, UK, and US law, and particularly of certifiers like FSC, SBP and PEFC. 

NOTE: this is a faster-moving story than we normally cover in our podcasts. Since recording this conversation on Tuesday 8th March, SBP and FSC have both announced that they are longer certifying Russian wood.

Further reading

·         The campaign backed by 120 NGOs to boycott Russian and Belarusian wood
·         Russia’s timber oligarchs – new Earthsight analysis
·         Earthsight’s ‘Taiga King’ investigations exposing illegal Russian logging for European export
·         IKEA’s House of Horrors – Earthsight’s investigation into IKEA’s illegal Russian supply chain
·         2020 investigation by The Telegraph exposing unsustainable Russian logging in Drax’s supply chain

Find more podcasts and articles at www.elc-insight.org

Bertie Harrison-Broninski:

Hello, and welcome to the Economy, Land and Climate Insight podcast. My name is Bertie, and today I'm talking to Sam Lawson, the founder and director of Earthsight, an investigative NGO that specialises in timber supply chains, with a particular focus on Russia and Eastern Europe. As Russia's aggressive invasion of Ukraine continues, it's been reported today that Russia is now the most sanctioned country in the world. Earthsight are part of a network of organisations calling for sanctions to include bans on Russian and Belarusian wood. So I'm going to be talking to Sam about that, the bioenergy industry, and about how Europe has been supporting illegal and unsustainable logging from Russia for many years.

Sam:

One of the ways in which Russian wood has been able to continue flooding into Europe is because the world's global green labels have been rubber stamping it as legal and sustainable for some years.

Bertie Harrison-Broninski:

I began by asking Sam about the public letter 120 NGOs have signed calling for sanctions on Russian and Belarusian wood.

Sam:

Earthsight has been working on Russian, Belarusian and Ukrainian forest issues for some years now. And we have close colleagues and friends in Ukraine week who we've been working with where the number of years. They triggered this effort to call for boycotts and sanctions of Russian and Belarusian wood. We decided to support that. It's important to stress that there was already a problem with this wood. Even before the conflict. We have done multiple reports over the years showing that a lot of the wood coming from places like Russia, into Europe, UK, US is coming from unsustainable harvesting, from illegal logging, is linked to corruption, is driving climate change and species loss. So it makes it easier to be calling for such sanctions. But yeah, we were standing in solidarity with our friends in Ukraine whose houses are being bombed as we speak.

Bertie Harrison-Broninski:

And I want to give you proper chance to talk about those investigations in a minute. But to start with, I mean, how significant are timber exports to the Russian and Belarusian economies? How big a deal is this within the kind of Ukraine, Russia conflict context?

Sam:

Russia is one of the biggest exporters of wood in the world. It exports around $12 billion worth of timber pulp and paper each year. That number is dwarfed by its exports of oil and gas, for example, but it's still a very significant contributor to the Russian state. For Belarus the wood wood industry is even more important as a driver of the economy there. And the Europe and the US and UK are big markets for both countries, particularly for Belarus. But about a third of what Russia exports goes to Europe, or the US. Those numbers have been growing over the over the years. In the EU, for example, just last year, it increased its value of its imports of wood from Russia by 50%.

Bertie Harrison-Broninski:

What industries and companies even on the kind of European and American side of the big players?

Sam:

A lot of the biggest importers are not companies that would be known to the man in the street, but they are nevertheless multi billion dollar companies. So we've identified the top 15 buyers in America in Europe of Russian wood. These include three Finnish owned multinational giant timber and pulp and paper groups, UPM, Stora Enso and Metsa. So far Stora Enso and Metsa have announced in response to the calls by NGOs have announced the halt to all import of wood from Russia. At this point UPM, who were the biggest importer in the world have yet to follow suit. Other companies, big paper companies, some of the biggest paper companies in the world, International Paper and Mondi again. These aren't companies you might have heard of, but their paper is everywhere. So if you're using paper, you're probably using Mondi or International Paper. There are retailers further down the stream. Leroy Merlin, which is a big DIY chain in in Europe has a long term supply agreement with one of the big suppliers in Russia to supply it with plywood. And we know as well that Nestle and Mars are using Russian pulp and paper for their packaging. Bioenergy is also important. Until it announced a halt recently, Drax the huge power station in the UK was consuming Russian pellets, Russian wood pellets. And there are other energy companies in Europe that have also been importing Russian pellets. One of those is the French energy giant Engie, which is a multi multi billion dollar company. At least last time I checked, they still haven't responded to this, this call to halt imports of pellets or wood from Russia.

Bertie Harrison-Broninski:

Is it more individual companies at the moment that are putting out statements about whether or not they're going to stop importing wood? You're not seeing anything at a governmental level?

Sam:

The EU has banned all import of wood from Belarus. And that's now happened. And that's very welcome. We had been researching Belarus we've not published anything on Belarus. We were very deeply involved in researching a story there. So we know quite how closely the Belarusian regime is to the timber industry there. President Lukashenko personally controls a large chunk of Belarus' forests. So the money from that timber goes direct into his personal war chest. That's a welcome step. It's a step the UK is yet to get to follow. The US? There is now talk amongst US legislators of a total ban on all trade with Russia and Belarus, which of course would affect timber, but at this point, Europe and the UK are not talking about sanctions on Russian wood. And it's coming down to individual companies to make the necessary steps. But not just companies. Also certifiers - so one of the ways in which Russian wood has been able to continue flooding into Europe is because the world's global green labels have been rubber stamping it as legal and sustainable for some years. So these green labels FSC, PEFC, and Sustainable Biomass Program. They send in auditors and are supposed to check whether or not the wood is legal and sustainable. And one of the things that these Ukrainian and Belarusian and global NGOs are calling for as well as sanctions by the importers is for these global green labels to drop their certification of Russian wood. So far only PEFC has agreed to do that they have in the last few days announced that all better Russian and Russian words will be classified as conflict timber and no longer given the PEFC label. FSC has yet to make its decision in that regard. And the same is true of SBP.

Bertie Harrison-Broninski:

So you're saying that Europe or the EU has banned Belarusian timber imports. But in the UK, Drax the bioenergy company has said that they're no longer going to take Russian wood but they haven't said they're going to stop taking Belarusian wood, right?

Sam:

No, they haven't. And that's certainly a question I would be interested to ask them. We know from from previous certification reports that they've been using better Russian pellets in the past. And that's the step they should also be taking.

Bertie Harrison-Broninski:

I don't know if you saw he probably did. But the IEA put out a 10 point plan last week for how Europe could get off Russian natural gas. And one of those points was to increase bioenergy production in Europe. I wondered whether you think that's possible within the context of no longer taking Belarusian and Russian wood, or whether it makes any sense to be increasing one form of energy that we rely on Russia on merely to replace it with another.

Sam:

Yeah, I mean, there are there are huge problems with bioenergy as a solution to climate change. It's not the solution to Europe's reliance on Russian gas. I mean, they could get their fuel from places like the US and Canada. But there have also been problems with sustainability in those places as well. So the idea that we can solve a problem with burning old fossil trees by burning new non fossil trees is rather ridiculous. We need to wean ourselves off these sources of fuels altogether and reduce our consumption of energy. And there are things that can be done to do that. There is so much more that that Europe and the UK and the US could and should be doing to promote genuinely clean energy.

Bertie Harrison-Broninski:

I wondered now if you could talk us through a little bit your series of investigations into illegal practice in Russia around forests. What was the story there?

Sam:

We've done two big reports. Well, two major stories, I suppose. The first of which related to Russian forest, that involved Russia's largest illegal logging case this century involving vast quantity of timber, some 400,000 cubic meters of timber illegally logged, millions of trees. This was a case that involves the Russian security services, it involved people being arrested and tried for corruption and high level bribery involving officials in Moscow as well as out in the sticks. And what we found was that a number of European companies were had continued to buy wood from the company involved in the Russian far east, despite this scandal being very well documented in the Russian press. So that was the first story we published. We published that story over a year ago. And we alerted the companies. We alerted the European authorities about this. Because it was an apparent breach of EU legislation. EU's got laws in place, as does the UK, which make it an offence to import illegally sourced wood but also importantly, require companies to reduce the risk of importing illegally sourced wood to what's known as a negligible level. And the idea that you could be buying wood from a person like this, or companies linked to a person like this, and call that low risk was always nonsensical. What's particularly shocking is in an update report we published quite recently, we found that a number of these European buyers have continued to buy wood from companies linked to this particular timber Baron in the Russian far east, despite having exposed that, and that really, it says a lot about the implementation of those EU and UK laws. Similar case, what we found is that we published a report last year called House of Horrors which exposed how IKEA is using or has been using vast volumes of Russian wood linked to illegal logging in Siberia, Russian Siberia. IKEA as we've exposed a number of times is very reliant on wood from from the ex-Soviet world. Russia is one of its biggest suppliers. And what we found in that case was it was a timber baron, a charismatic timber baron called Evgeny Bakurov, who was a local politician, one of the top 50 highest earning civil servants in Russia, that he was supplying wood, which was ultimately finding its way into IKEA products that would have been certified as legal and sustainable by the Forest Stewardship Council (FSC), the world's leading green label, but we've we showed that it was illegal on multiple levels and it had been shown to be illegal by court cases in Russia, which somehow auditors had neglected to notice. IKEA responded to it by cutting that company out of their supply chain, by in fact cutting that entire region of Russia out of their supply chain. But now that in the wake of the conflict in Ukraine, IKEA has halted all use of wood from Russia and Belarus or imports of wood from Russia and Belarus. It's not yet clear though whether IKEA is going to carry on using Russian wood which passes through third countries like China. Our report involved wood which passed via a factory in Indonesia. Much larger volumes pass through factories in China. So it's not yet clear whether that word is also covered by IKEA's new ban. Both of those reports really, they exposed a failing in laws in the US, Europe and UK, which are supposed to prevent consumers in those countries being complicit in these kinds of activities overseas. As I mentioned, EU has a law in place, the UK has got a law in place, the US has a thing called the Lacey Act, which does something similar. So illegal wood's not supposed to be able to come into these markets. Unfortunately, those laws aren't being implemented properly. Now, that's very important because all those places now are in the process of developing wider legislation, which is meant to address the wider role that we have in the West in driving deforestation overseas. Most of that deforestation is not driven by wood. It's driven by agricultural commodities. In Brazil, the biggest driver of deforestation by far is cattle ranching, and the meat from that is exported to places like Europe and UK. In Indonesia, it's palm oil, and that palm oil ends up in practically everything we consume. Biscuits, ice cream, lipstick, so on. So after a lot of campaigning by international NGOs around the world, there's been a realisation that voluntary efforts by companies to clean up those kinds of supply chains aren't working and that legislation is needed. The problem is that that legislation which is underdeveloped, actively under development in each of those places, will not be effective if it doesn't learn the lessons of previous legislation with regard to illegal timber. And that's where we are trying to urgently influence that debate in the EU in the UK in the US to make sure that they learn those lessons and they pass laws which are going to work because with climate change being such an emergency right now, we don't have enough time to pass legislation that doesn't work and fix it later.

Bertie Harrison-Broninski:

How do you learn those lessons and make policy that works? Why didn't the previous policy work?

Sam:

A number of reasons. Partly it was to do with the way the laws were designed. Partly it's to do with political will. Policy it's to do with an absence transparency over the implementation of those laws. Transparency is a great way of ensuring that implementation is, is increased and improved by engaging the general public and civil society organisations like ours and allowing us to monitor what the enforcement authorities are doing and not doing. The EU certainly has made its draft legislation, which it's tabling right now. It's under discussion at the European Parliament this year, this summer, this spring and summer. They have taken a number of steps to improve implementation enforcement. But there are still some big holes. One of those that we've been calling out is a name and shame clause. An early draft of that legislation requires authorities in Europe to name publicly companies found to not be compliant. And that clause was taken out prior to the draft being published. And we're calling for that to be put back in. Because as I say, transparency is very important. NGOs are also calling for the data and information regarding who's trading what and what permits have been issued to be made more publicly available. Again, it's so that the general public can act as a sort of final watchdog. If the government authorities aren't doing their job in making these companies do their job, then they have to empower civil society to help help monitor them.

Bertie Harrison-Broninski:

And similarly, you talked before about certification schemes, why have those failed to properly certify to the right standards? And what can change with that?

Sam:

Yeah, so another big picture, big part of why these laws have failed is because what they've driven largely in the best cases, I mean, not everything is certified, which is coming into Europe and the UK. But in the best case, best case scenario, what they've done is they've led to an increase in certification. So these green labels have stepped in and have expanded their operations hugely, including in places like Russia. And as a result of this legislation, and what companies are doing is that they're waving these green labels to the authorities in in Europe and saying, look, this is proof that this wood is compliant with this law. And what what our reports have shown again, and again and again over the last few years is that that isn't true, that these certification schemes and their audits are not good enough to demonstrate compliance with this law, quite the opposite. We found demonstratively illegal wood in their supply chains. And these certification schemes have failed to make the necessary changes to their systems and procedures, which would tighten that up we were signatories to a joint letter fairly recently, the end of last year, aimed at FSC, the world's leading green wood label calling for it to make fundamental changes to its systems to address these concerns. It's yet to make those changes. In the meantime, I should say we've been stressing to European authorities that they cannot trust FSC. In fact, already in relation to Ukraine where there are also traditionally large problems with illegality and corruption in the forest sector the EU commission has, and the EU competent authorities to the member states have approved guidance, which says that certification is not good enough to demonstrate compliance with this law with regard to Ukraine. They were in the process or are in the process of producing similar guidance for Russia, triggered by our reports, but have yet to publish it. So we're trying to get FSC to improve its systems and procedures. In the meantime, we're trying to get the EU authorities to stop recognising those as proof of compliance.

Bertie Harrison-Broninski:

I know with your investigations, you've looked into a lot of different types of illegality around this Russian word, including things like fraud and corruption. I wondered if you could talk in a little bit more detail about kind of environmental or climate concerns, perhaps illegality around those supply chains?

Sam:

The case that we exposed in Siberia last year, the one that was linked to IKEA, you've got a situation in Siberia where there are vast forest fires taking place. They don't get quite the amount of global attention as the fires in in Brazil, but they're of equal or greater importance in terms of contributing vast volumes of CO2 into the atmosphere. Those fires are contributed to by logging and particularly illegal logging. So for example, one of the illegalities that we found rife in the forests that we inspected, that was supplying IKEA and were FSC certified was the abandonment of logging debris, and destructive logging practices which result in a lot of dry kindling effectively. And that kind of practice tends to create much more powerful and intensive fires which spread more easily. And that's something that's been studied by academics in the past. So there's no doubt there's a link there between forest destruction and one of the biggest drivers of climate change. Something like 12 plus percent of all human induced climate emissions come from the loss of forests. If we're to stop climate change, we don't just have to leave the fossil fuels in the ground, we also have to leave the trees standing.

Bertie Harrison-Broninski:

And as a final question, do you feel optimistic that these issues are going to change? Do you think that when you mentioned Ukrainian timber hasn't always been great, either? Do you think companies are just going to move to other supplies that have similar problems or could we see a different landscape next year with these kind of issues?

Sam:

I think what you're going to see is hopefully it will drive down consumption. Because ultimately, what this is going to do, it's going to drive up prices. I mean, yes, China is the biggest buyer of Russian wood. And yes, they will take some of the slack if exports to Europe and the US are halted or reduced. But it can only take up so much slack. And on a practical level, a lot of the areas of Russia that supplying Europe are in western Russia, and it's not very easy to just shift that wood to China. And also a lot of that work that goes to China actually ends up in Europe and US anyway, in our furniture and our wood products, so it would be affected anyway. So I think what we're going to see is wood prices dramatically increase. But I think that's a good thing, if that makes people think twice about their fast furniture. You know, one of the things we exposed with IKEA report was just how much wood waste there is and how it's been growing rapidly, very rapidly. The amount of furniture being used for just a few years and thrown into landfill. Because it's so cheap. So if it makes wood more expensive, then that's got to be a good thing.

Bertie Harrison-Broninski:

My thanks to Sam Lawson for coming on the show. We had this conversation on Tuesday 8th March. It's now Friday 11th, and we've had some good news since then - FSC and SBP have both announced they are no longer certifying Russian wood. If you want to really dig into these investigations in more detail, you can read long articles on earthsite.org.uk. And if you want to read more about bioenergy, the timber industry, other climate and environmental issues or listen to more podcasts on these topics, you can check out www.elc-insight.org If you enjoyed this podcast, please follow us or subscribe on your favourite platform and we'll be back soon with more interesting interviews with climate experts. Thanks for listening!