Ukraine Timber Risk Profile

Statement on the legality of timber originating from Ukraine

Updated 08 May 2022

A military conflict involving the Russian invasion of Ukraine has taken place with the support and collaboration of Belarus authorities.

A trade ban implemented by the Council of the EU on products from Crimea or Sevastopol due to the annexation of this part of Ukraine has existed since 2014. See Council Regulation (EU) No 692/2014 of 23 June 2014. Imports into the European Union of goods originating in the non-Ukraine controlled areas of Donetsk and Luhansk oblasts are also prohibited in line with Council Regulation (EU) 2022/263 of 23 February 2022.

Based on European Commission guidance on the prevalence of armed conflict and sanctions in Due Diligence Systems there is a risk that products sourced from some parts of Ukraine can be considered high-risk for legal non-compliance, due to the ‘prevalence of armed conflict’ in parts of the country. In these areas, it could be concluded that a de-facto lack of law enforcement in the forest sector may exist due to the armed conflict.

This guidance is mirrored in decisions made by important forest certification schemes:

A recent statement from PEFC considers that wood-products “…originating from occupied Ukrainian territory is considered ‘conflict timber”.
FSC has communicated that - in the invaded regions of Ukraine or within armed conflict zones - the norms of Ukrainian legislation cannot be enforced. This position is also reflected in the revised FSC Controlled Wood Risk Assessment for Ukraine which also makes risk conclusions for the Autonomous Republic of Crimea, temporarily occupied by Russia, as well as the Anti-Terrorist Operation zone in the Donetsk and Lugansk regions – zone of armed conflict.

Similarly, the summary record of the Ninth Meeting of the Multi-Stakeholder Platform on Protecting and Restoring the World’s Forests, including the EUTR/FLEGT (29April22) concluded the following guidance in relation to areas not subject to the prohibitions described above:

Areas of active military hostilities within Ukraine: in those parts of the Ukrainian territory with ongoing military hostilities, active governmental control of timber logging as well as tracking of timber trade is not possible. Third party verification is suspended and operators cannot conduct field checks due to risk of being affected by active military activity. In view of these factors, it is not possible for operators to draw conclusions about a negligible risk level.
Other parts of Ukraine: In areas not subject to active military hostilities, the situation remains highly volatile. While challenges exist for the possibility to minimise the risk of sourcing timber in contravention of the applicable Ukrainian legislation, it is possible for operators to place on the market if negligible risk is achieved. However, the conclusions on timber imports from Ukraine of the 2nd meeting of the Multi-Stakeholder Platform on Protecting and Restoring the World’s Forests, including the EUTR/FLEGT (09December20) remain valid. See the specific guidance and annex in relation to Ukraine, from this meeting.

Guidance:

For companies based in the European Union:

It is not possible to legally import wood-products from Crimea or Sevastopol, nor from the non-Ukraine controlled areas of Donetsk and Luhansk oblasts.

Preferred by Nature recommends that companies carefully monitor the situation, and exercise additional caution in their due diligence process, if timber is being sourced from the remainder of Ukraine. According to the EU Timber Regulation, due diligence needs to be applied on imports from Ukraine. Companies must assess risks in relation to armed conflict in zones where a de-facto lack of law enforcement in the forest sector may exist due to the armed conflict:

Cease sourcing from areas temporarily occupied by Russia or areas of active military hostilities within Ukraine.
For other parts of Ukraine not subject to active military hostilities, the situation remains highly volatile. While challenges exist for the possibility to minimise the risk of sourcing timber in contravention of the applicable Ukrainian legislation, it is possible for operators to place on the market if negligible risk is achieved. However, the following guidance should be followed.

For companies based outside of the European Union:

Carefully monitor the situation, and exercise additional caution in their due diligence process, if timber is being sourced from Ukraine.

Timber Risk Score: 12 / 100 in 2021. The Timber Legality Risk Assessment for Ukraine contains an evaluation of the risk of illegality in Ukraine for 6 categories and 26 sub-categories of law.

Ukraine has around 9.7 million hectares of forest land (FAO, 2020), representing 16.7% of the total land area. Only 0.6% are primary forests, 49% are naturally regenerated forests, and over 50%, are planted forests.

The vast majority of forests (nearly 87 %) are state-owned, while 13% of forestry land plots are attributed to communal and private property. State Forest Resources Agency of Ukraine (SFRA) and other central government bodies manage the state-owned forest.

Illegal logging is a considerable problem in Ukraine (Regional Environmental Center, 2010) due to illegal logging, illegal wood exports, and timber-related corruption. Ukraine is also a complex country because of the imperfection of the current legislation and the existence of conflicts between laws.

Corruption Perceptions Index

Score: 32 / 100 in 2021

Rank: 122 out of 180 countries in 2021

Bans and restrictions

A 10-year ban on the exports of all types of raw logs (HS code 4403) has been in place since 2015. The ban does not cover logs intended for use as fuel, limited to logs of less than 2 meters in length.

Armed conflict

Under revision

CITES species

None listed

Certification

FSC Certified Forest Area: 3,763,641 hectares (October 2021).

PEFC Certified Forest Area: 44,021 hectares (September 2021).

Information Gathering

Timber sources

Find out the different sources of legal timber
Determine which source type your timber comes from
Find out the main documents that can be used to indicate legality throughout the supply chain

Timber source types	Description of source type
A. Forest owned by the state and managed by SFRA	State-owned subordinated to and managed by the State Agency of Forest Resources of Ukraine (SFRA) under the Ministry of Environmental Protection and Natural Resources. These areas include production forests, protected forests (nature conservation forest and forest delivering other ecosystem services) and cover 73% of all forests in Ukraine Legislation is defined at the national level through Law and Orders and Internal Orders of State Agencies. Some Orders and all Internal Orders of State Agencies are specific just for forest managed by SFRA.
B. Forest managed by other entities	Forest areas of communal and private ownership and state ownership, subordinated to entities other than SFRA: - Communal property - about 13% of forest lands (1.3 million hectares) - Private property - less than 0.1 % of forest lands - State property managed by other agencies –about 14 % of forest lands Legislation is defined at the national level through Law and Orders. Some FMEs could have specific guidelines to follow, defined by the forest owner. However, there is no unified regulation, like in the case of forest owned by the state and managed by SFRA (Source type A).

Timber source types

Description of source type

A. Forest owned by the state and managed by SFRA

State-owned subordinated to and managed by the State Agency of Forest Resources of Ukraine (SFRA) under the Ministry of Environmental Protection and Natural Resources.

These areas include production forests, protected forests (nature conservation forest and forest delivering other ecosystem services) and cover 73% of all forests in Ukraine
Legislation is defined at the national level through Law and Orders and Internal Orders of State Agencies. Some Orders and all Internal Orders of State Agencies are specific just for forest managed by SFRA.

B. Forest managed by other entities

Forest areas of communal and private ownership and state ownership, subordinated to entities other than SFRA:
-   Communal property - about 13% of forest lands (1.3 million hectares)
-   Private property - less than 0.1 % of forest lands
-   State property managed by other agencies –about 14 % of forest lands
Legislation is defined at the national level through Law and Orders. Some FMEs could have specific guidelines to follow, defined by the forest owner. However, there is no unified regulation, like in the case of forest owned by the state and managed by SFRA (Source type A).

Risk Assessment

Risk assessment summary

Legal rights to harvest

Legal rights to harvest

Risk of occupation of forest land for other activities (1.1);
Risk of forest management without having land right documents in place (1.1);
Risk of conversion of forest land to agricultural land (1.1);
Risk of planning and conducting unjustified sanitary cutting in the healthy forest (1.3);
Risk of lack of approval of continuous forest management planning at the FME level (1.3);
Risk of logging in areas not covered by a Forest Management Plan (1.3);
Risk of incorrect allotment and mensuration of harvest areas (1.3);
Risk of preparing technological (logging) maps without considering field practices (1.3);
Risk of incorrect assessment of volumes, species composition, and size-quality characteristics of wood during the planning (1.3);
Risk of harvest without the necessary permits (Logging ticket) (1.4);
Risk of harvesting permits (Logging Tickets) contains wrong information:
o species are not correctly identified (high-value species classified as low-value species) (1.4);
o harvesting permits (Logging Tickets) are based on wrong inventory data (1.4);
Risk of selling Roundwood through direct agreement, without auction (1.4);
Risk of selling Roundwood through auction without competition (1.4);

Taxes and fees

Risk of underestimation of the tax “special use of forest resources’’ as the tax is based on in-correct classification of wood (1.5);
Risk of underestimation of VAT, income, and profit taxes as the taxes are based on in-correct classification of wood (1.6, 1.7);

Timber harvesting activities

Risk of violation of technical and silvicultural requirements. Examples of violations; skidding trails that are not followed; damage of trees; damage of soil, etc. (1.8);
Risk that Red Book species are destroyed (1.9);
Risk that identified Nature Reserve Funds are not registered correctly in the State Land Cadastre (1.9);
Risk of illegal logging in protected areas (Nature Reserve Funds) (1.9);
Risk that harvesting activities affect the conservation status of protected areas (e.g., landscapes, monumental trees, etc.) (1.9);
Risk that prohibited sanitary cutting in the Carpathians are conducted through another cutting types name, but in practice is still to be considered sanitary cutting
Risk that trees that perform “important environmental functions” (as defined by the Law) are removed (1.10);
Risk that the requirements for the development of Environmental Impact Assessments (EIA) are not followed (1.10);
Risk that the logging maps, chapter 8 on Nature Protection requirements do not contain environmental details (1.10);
Risk that health and safety equipment are not provided by the employer or used by staff (1.11);
Risk that forests workers are not following the safety measures defined in logging maps (1.11);
Risk that periodical medical checks are not conducted (1.11);
Risk that not all forest workers are employed through formal agreements (1.12);
Risk that forests workers do not receive benefits guaranteed by the Law (1.12);

Trade and transport

Risk of incorrect classification of species, qualities, and quantities in waybills (1.16);
Risk of transport of wood without waybills (1.17);
Risk of multiple transports with the same waybill (1.17);
Risk of transport with fraudulent waybill (1.17);
Risk of illegal transfer pricing occurring at a different level of the supply chain (1.18);
Risk that wood or wood products banned from export are exported (1.19);
Risk of understating classification and volumes of timber for exports (1.19);

Processing

Risk that small sawmills are not legally registered (1.22);
Risk that activities are conducted without minimisation of pollution (1.23);
Risk that activities are conducted without considering health and safety requirements (1.25);
Risk that technical specification of technological equipment is inaccurate (1.25);
Risk that workers are not employed through a formal agreement (1.26);

Risk Mitigation

Mitigate the risks in your supply chain

Learn which actions we recommended to mitigate the risks associated with the timber sources from Ukraine by looking at our Risk Mitigation Guide.

Source Certified Materials

Preferred by Nature believes that third party certification (for example FSC and PEFC certification) can provide strong assurances of the legality of the products they cover. Companies seeking to mitigate the risks of sourcing illegal timber should seek to purchase third party certified materials wherever possible.

While the European Timber Regulation does not include an automatic “green lane” for certified products, it does recognise the value of certification as a tool for risk assessment and mitigation. The European Commission says that companies “may rate credibly certified products as having negligible risk of being illegal, i.e. suitable for placing on the market with no further risk mitigation measures, provided that the rest of the information gathered and the replies to the risk assessment questions do not contradict such a conclusion.”

For more information on using certified materials in your due diligence, including how to assess whether a certification system meets EUTR requirements, see the page on Certification and Due Diligence.

How to mitigate risks for timber from Ukraine

There are five generally recommended actions to mitigate the risks associated with the timber sources from Ukraine:

1. Fully map your supply chain

Our supply chain mapping tool can help you do this.

2. Obtain and verify documents

3. Consult with stakeholders

4. Carry out on-site verification

5. Conduct targeted timber testing

Conduct timber testing on samples of purchased material to verify the species or origin of timber, where appropriate

Profile Publication Date

2022-05-08