Data Available to Trace US Timber Imports Back to Amazon, Sayari Says

Sayari, a firm that sells risk intelligence to companies with international trade compliance needs, demonstrated how its ability to find and analyze data can help an importer of laminates, flooring or timber evaluate the risk that the wood was harvested illegally in Brazil.

A July 27 webinar offered by Sayari also traced Brazilian timber exports to China from companies that have had repeated environmental violations. China is a major supplier of both flooring and furniture for the U.S. market.

The Lacey Act, which requires importers to report what kind of wood, and where the wood comes from, does not yet cover furniture, but will in 2024 (see 2303270027). It also prohibits the import of illegally harvested wood, and if an importer did not employ the "degree of care which a reasonably prudent person would exercise under the same or similar circumstances" to determine if the wood was legally harvested, there could be civil penalties or misdemeanor criminal penalties.

Henry Peyronnin, a senior analyst for Sayari, showed webinar attendees how Sayari was able to combine Brazil's own environmental agency enforcement records, corporate records and trade records to show which firms have been fined most for harvesting in the Amazon. He gave just one example: a fine levied on May 18, 2023, for destroying 15 hectares of forest in a protected area without a license. Peyronnin said the fine is not proof that the company was engaged in illegal logging -- it could have supplied inadequate documentation to the regulator, and fines are often contested. Still, he said, such fines "may point to legal or reputational risk" for companies doing business with these firms.

Once Sayari identified the companies with the most environmental fines, analysts examined 900,000 timber shipments by reading bill of lading data. He said they used the fuzzy matching package in Python and then manually reviewed matches until they had a high degree of confidence the shipments were from the firms that had been penalized.

They found 84 companies with strong matches, which had been given 596 fines for environmental violations since 2022. From those firms, there were 3,630 consignments of timber to 71 countries, and 596 of those consignments went to the U.S.

Peyronnin also showed how you can uncover risk from wood product manufacturers far from the Amazon. He showed how Laminort, a manufacturer of laminate and wood paneling in Southern Brazil, is a shareholder of a mill in the Para state in the Amazon, and that mill has faced environmental fines. He also gave the example of SWI Hardwood, a Dutch company, and showed how seven of its 11 Brazilian timber suppliers have faced fines from Brazil's environmental agency. He then showed how SWI exported flooring to a U.S. firm.

"We can’t say with certainty that the same timber from Brazil is exported to the U.S.," he added. And, he said, Laminort may not be exporting high-risk timber to its American customers. But he said the fact that Laminort is an owner of a mill with a history of environmental enforcement problems "increases the likelihood that high-risk timber harvested makes its way into finished goods by the parent company."

Wood products importers want the government to disclose its own supply chain mapping when it alleges violations. The International Wood Products Association says it supports the Lacey Act but complains that "U.S. Fish and Wildlife Service (FWS) and Customs and Border Protection (CBP) have been inconsistent in the application of the Lacey Act, resulting in confusion and delays."

The trade group is lobbying Congress to require agencies to provide evidence of the alleged violation. It complains that the government "drags out the process for determining noncompliance with the Lacey Act. This forces the imported products to be held at the port, accruing significant demurrage and storage fees for importers."

Peyronnin said only Brazil has a publicly accessible database of environmental enforcement actions against firms, but that it is possible to investigate timber risk in Indonesia, Malaysia and Papua New Guinea through combining data on politically exposed persons, searching for local news coverage on corruption, deforestation and social conflict, and geocoding for protected areas. He also added that Sayari is able to search for beneficial owners, and if it turns up that the owner is an offshore entity whose identity is obscured, that "raises a lot of risk."

He was asked which other countries are high-risk, and he said Central America, and the Amazonian areas of Peru, Ecuador and Colombia are all known to have deforestation struggles. Still, he said, "it's kind of hard to establish consensus about what establishes 'high risk.'"

He acknowledged that some countries have so little data available that it's hard to know who you're dealing with -- and gave the Democratic Republic of the Congo as an example.

Another viewer asked if relying on sustainability certifications is adequate. Peyronnin said that one of the firms Sayari identified as an environmental violator in Brazil has several forestry stewardship certifications, as do many European firms that import from the Brazilian firms Sayari identified as frequent violators.