Logging on to legality
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Article Author: Patrick Newton, CEO of Helveta
Imagine this. It's 2020 and a shopper walks through a store with her mobile phone in hand. She scans the codes on the products she wants and gets charged directly to her e-wallet for each item.
Each time she scans a code, before she decides to buy anything, a full product history is displayed on her phone. She can check online what went into the product, where it came from, who processed it and who certified it. She can be sure that her children, sitting in the shopping trolley, will not be harmed by any anything she buys.
Along comes her husband lugging a flat pack of this year's garden furniture. She scans the flat pack, sees all the information she needs to make a choice, such as checking that the timber has been legally and sustainably sourced, and buys the furniture.
Moore's law, formulated by Gordon Moore, founder of Intel, states that the number of transistors on a single chip will double every two years. Put another way, the cost of memory and computer processing will halve every two years. This law means that mobiles and smart phones, connectivity and tagging technologies, like RFID and barcodes, will continue to proliferate exponentially. The result is that we’ll see smart phones on the ground in forests, reading from and writing to RFID tags on trees and logs and sending product his-tory data to retailers and the end consumer.
Consumer knowledge
Consumers have a growing desire to know much, much more about the products they buy. It’s not just about food safety or sustainability. It's also about knowing that in this interconnected era, pulling down information on demand about anyone or anything should be free and easy. This is the new law of consumer demand.
Moore's law and consumer demand are now coming together with legislation in the US and EU specifically targeted at the timber products sector. The combination of this group of laws will fundamentally transform the timber trade and its supply chains.
In May 2008, the US Congress amended a 100-year-old statute, the Lacey Act, banning commerce in illegally sourced timber and timber products. The Lacey Act prohibits trade in illegally sourced plant products and establishes penalties for importers who fail to comply, including confiscating goods, large fines and the possibility of significant jail time. The US Department of Justice already has a high profile investigation under way that may result in the first criminal prosecution under the amended Lacey Act.
Similar to the Lacey Act, in July 2010, the European Parliament approved legislation which bans illegally harvested timber or timber products from being placed on the EU market. The legislation sets out guidelines for imposing fines; the environmental damage caused, the value of the timber and any lost tax revenue can all be taken into consideration. EU countries can also impose criminal penalties. The legislation is expected to come into effect in 2012. In the UK the coalition government has already committed to make procuring imported illegal timber a criminal offence by 2012.
Due diligence
Both EU and US legislations focus on businesses proving they have working systems of due diligence. These systems need to be able to demonstrate and verify the source and legal status of timber material purchased by the business or placed on the market for sale. Due diligence systems do not provide safe harbour from prosecution but they do provide mitigating circumstance in the event of a prosecution or investigation. What can provide for safe harbour from prosecution is the purchase of timber from Forest Law Enforcement, Governance and Trade (FLEGT) licensed countries or nations that have committed to the terms of an environmental annex under a Free Trade Agreement with the US. FLEGT is the EC’s programme for agreements with partner nations to drive good governance in the timber trade. Both FLEGT and the US Free Trade processes are centred on nation states putting in place national wood tracking systems that verify and assure legality for all in-country timber processing. Given the volumes of data involved and the types of analysis required, these systems are necessarily using the power of computing to drive effectiveness and the power of Moore’s law to ensure costs are manageable for end users using them.
The legislation is coming; consumer expectations for product history are growing. The timber trade will have to respond and can use Moore's law in its favour. Moving quickly to put in place electronic due diligence systems can mitigate risk but can also provide competitive advantage. Given the nature of interconnected computing, supply chain data can be readily shared with buyers and suppliers, improving price to market and time to market. Importantly, data from those national wood-tracking systems could also be shared with buyers of imported timber in the US and EU, ensuring a seamless flow of goods and product history data. The wood products world is about to become part of the wired world and the slow to move will be left behind. Are you ready for the future?
source ttjonline.com
