Australia is currently reviewing its illegal logging laws and seeking input on how best to ensure these laws are fair and effective. In a recent government submission, I make recommendations on how to enhance the existing legal framework, based on findings of my academic research. The submission window has now closed, and we can expect recommendations in the first quarter of 2022.
Illegal logging is estimated to cost the global community up to AUD$206 billion each year. It contributes to global deforestation and biodiversity loss and compromises the planet’s resilience to global warming. It undermines legitimate timber industries and livelihoods, and has been linked to corruption, organised crime, human rights abuses, and armed conflict. Luckily, countries around the world have taken steps to eliminate illegal logging, developing laws that attempt to prevent and punish this harmful activity.
In Australia, the laws that target illegal logging are the Illegal Logging Prohibition Act 2012 (Cth) (‘Illegal Logging Act’) and Illegal Logging Prohibition Regulation 2012 (Cth) (‘Illegal Logging Regulations’) (hereafter, ‘Illegal Logging Act and Regulations’). These laws prohibit the importation and domestic processing of illegally harvested timber. They require that timber importers conduct due diligence to ensure illegally harvested timber does not enter their supply chains and end up on the Australian market. There are also penalties for non-compliance, which are enforced by the Department of Agriculture, Water, and the Environment.
My research demonstrates the importance of destination country laws such as Australia’s Illegal Logging Act and Regulations, which also exist in other destination countries and jurisdictions such as the United States, United Kingdom, and the European Union.
Destination country laws interact with laws in source countries around the globe, as well as with certification schemes and the efforts of stakeholders at the local, national, regional, and international levels. Relevant stakeholders include corporations and industry associations, non-government organisations (NGOs) and civil society groups, banks and investment bodies, governments and regulators, consumers, and forest reliant communities. Collectively, interaction between these legal mechanisms and stakeholders impact the effectiveness of efforts to end illegal logging.
By combining due diligence requirements for companies, prohibitions on importation of illegal timber, and penalties for non-compliance, destination country laws represent an essential component of the transnational regulatory framework. However, my research also shows a number of risks and limitations with these laws.
Limitations include significant rates of non-compliance by corporate actors; enforcement challenges stemming from fraud and corruption in complex transnational supply chains; and, a need for greater interaction between destination country laws and laws in place in source countries. There is also a pressing need for greater collaboration between stakeholders to ensure that incentives for illegality are reduced, and opportunities for sustainable and ethical forest governance practices are enhanced.
To overcome existing limitations and enhance the opportunities for stakeholder collaboration, I make the following recommendations for improving Australia’s Illegal Logging Act and Regulations:
- The definition of the term “illegally logged” should be broadened and clarified to account for the interaction between harvest-specific laws and other relevant laws including anti-bribery laws, environmental laws, labour and human rights laws, constitutional protections, and customary land rights.
- The due diligence process should mandate consideration of corruption and human rights abuses (including modern slavery) through inclusion of these risks under sections 10 and 13(3) of the Illegal Logging Regulations.
- The Illegal Logging Regulations should mandate that the timber importers and processers who are subject to regulation make public non-sensitive elements of their due diligence system, to allow stakeholders (including consumers, investors and NGOs and civil society groups) to evaluate these systems and support the evolution of best practice.
- Consideration should be given to expanding the scope of the Illegal Logging Act and Regulations to mandate due diligence by importers of ‘forest risk commodities’ and ‘financial institutions’, not just timber importers and processors.
This final recommendation deserves further explanation. Currently, the Australian law only applies to importers and processors of ‘regulated timber products’ (section 9 of the Illegal Logging Act and section 5 and schedule 1 of the Regulations). However, illegal logging can result from practices unrelated to the forestry industry. Notable examples include land clearing for palm oil or other agricultural activities and the raising of livestock for international export.
Expanding the scope and purpose of the law to address illegal logging that results from sourcing and trade of other commodities would be a valuable step towards an effective transnational framework to eliminate illegal logging. This step would align with developments in the United Kingdom, where the Environment Bill 2020 proposes due diligence requirements for all ‘forest risk commodities’.
I also recommend expanding the scope of the law to mandate due diligence systems and reporting for financial institutions, as well as importers. This step would align with global trends towards recognising the role of responsible investment and lending practices in tackling transnational problems. Financial institutions and investors are key stakeholders in the effort to end illegal logging. Existing data shows that the big four Australian banks (Westpac, NAB, CommBank and ANZ) have collectively provided USD$2.21 billion of credit to forest risk projects since 2013. Globally, the numbers are much larger. Expanding the coverage of the law to include financial institutions would increase incentives for collaboration between stakeholders and support sustainable and ethical practices by Australian businesses.
Countries, including Australia, must continue to support each other to eliminate illegal logging and develop a robust transnational legal framework to prevent harmful deforestation. By taking the above steps to improve its illegal logging laws, Australia has a unique opportunity to lead the world in this transnational effort. However, Australia cannot solve illegal logging alone. It must leverage the support of other powerful stakeholders and implement and enforce legal obligations to incentivise market transformation.
If we cannot eliminate illegal logging, the consequences will be catastrophic. However, if we succeed in this effort, we have an opportunity to protect vital forest ecosystems and the communities that rely on them, while increasing our planet’s resilience to climate change and contributing to sustainable economic opportunities for all.
The full submission, endorsed by Transparency International Australia, is available here.
Dr Hannah Harris is a legal scholar and Senior Lecturer at Macquarie Law School. Her research area is transnational law and corporate regulation. Her current work includes analysis of legal responses to transnational challenges, including illegal logging, modern slavery, and foreign bribery. Her research also explores the potential for technology to support transnational regulatory efforts, including the use of Artificial Intelligence and Machine Learning for supply chain governance, law enforcement, and corporate governance. See details of her work here, and connect on Linkedin.