European Forestry Pulse #48 🌲

Hello,

Happy New Year! Let's start 2026 with a story that matters for every certified forest owner.

PEFC is investigating one of its certified companies in Indonesia. The accusation: clearing natural forest while carrying the sustainability label. A field mission heads there January 24. The outcome will shape how markets view forest certification itself.

This isn't about Indonesia. It's about whether certification means what it claims. If a company can clear hundreds or thousands of hectares of forest and still get certified, what's the label worth?

Meanwhile, Finland's timber trade keeps falling. UPM finally sold its first commercial bio-product from Leuna. European sawmills changed hands in deals worth €400 million. And a new risk management tool went live for forest managers across Europe.

Here's what's moving European forestry as 2026 begins:

PEFC announced on December 17-18 that it's investigating forest management in Indonesia. A company with PEFC certification allegedly cleared tens of thousands of hectares of natural forest. The investigation will determine what happens next.

What triggered this: PT Industrial Forest Plantation (IFP) received PEFC certification in November 2024. But auditor reports acknowledged the company cleared 29,075 hectares of secondary forest between 2010 and 2024. That's an area larger than some European countries' annual harvest.

The recent clearing: Earthsight investigation found IFP cleared 334 hectares of natural forest between August 2023 and June 2024. This happened after the company adopted sustainability pledges. The clearing continued even as certification was being processed.

PEFC's response: The organization announced several steps:

The "partial certification" problem: PEFC's system allows companies to exclude recently cleared areas from certification scope. This means a company can clear forest, then certify only the older plantation areas. Critics say this creates a loophole.

The math problem: If IFP's 2010-2024 clearance areas are excluded, only about 30% of its plantation wood can legitimately carry the PEFC label. But supply chain tracking may not catch this distinction.

Why this matters for European markets: Mills processing IFP-linked wood export to Europe. With EUDR coming, deforestation-linked timber in supply chains creates compliance risk. Certification was supposed to prevent this. If it doesn't, what does?

The credibility question: Forest certification exists to give buyers confidence. When certified companies clear natural forest, that confidence breaks. PEFC must show its standards actually prevent bad practices. Or the label loses meaning.

What critics want: Revoke PT IFP's certification. Change standards to exclude any company that cleared natural forest anywhere on their land since 2010. Close the "partial certification" loophole.

What PEFC says: They're investigating. They take concerns seriously. They'll act based on evidence from the January field mission.

What this means for certified forest owners: Your certification's market value depends on the system's credibility. If high-profile failures go unpunished, buyers lose faith in all certified products. You pay the price for problems you didn't create.

The bigger picture: Voluntary certification faces pressure from mandatory regulations like EUDR. If certification can't guarantee deforestation-free products, why would importers trust it? This investigation tests whether voluntary systems can police themselves.

Watch January 24: The field mission results will matter. Strong action rebuilds trust. Weak action confirms critics' fears. The entire certification model is on trial in Indonesia. Sources: PEFC Official Statement | Earthsight Investigation | Mongabay

Finland's timber market keeps falling. November 2025 data shows industrial roundwood trade dropped to "exceptionally low levels." Both volumes and prices declined together.

The pattern continues: We covered Finland's Q3 2025 collapse in issue #35. Trade fell 42% despite high prices. November shows the problem isn't fixed. It's getting worse.

Volume collapse: November recorded the smallest roundwood trade volume in 10 years. That's a decade-low for a country built on forest industry.

Volume and price: Both fell together in November. That's unusual. Normally when volumes drop, prices rise. When both fall, it signals weak demand meeting reluctant sellers.

What's happening: Finnish mills aren't buying. They don't need wood because they're not running at full capacity. Construction demand across Europe stays weak. Mills that don't sell lumber don't need logs.

The forest owner dilemma: Sell now at low prices? Or wait and hope for recovery? Finnish forest owners face this choice with no clear answer. Waiting costs money if prices fall further. Selling locks in losses if prices rebound.

The Nordic signal: Finland often leads Nordic timber market trends. November weakness suggests 2026 starts slowly for the region. Swedish and Norwegian markets may follow. Source: Natural Resources Institute Finland (Luke)

UPM's Leuna biorefinery reached a new milestone on December 19. The facility sold its first commercial product: industrial sugars. This moves beyond "operational" to actually generating revenue.

What we reported before: Issue #42 covered UPM Leuna reaching commercial operation in 2025. The €1.275 billion facility converts hardwood into biochemicals. That was about production starting.

What's new: Now they're selling. Industrial sugars are shipping to customers. Money is flowing back. The biorefinery business model is proving itself.

The product pipeline: Industrial sugars come first. Next: renewable glycols for packaging, textiles, and cosmetics. Then: lignin-based fillers that replace carbon black in tires. Each product opens new markets.

The scale: Full capacity reaches 220,000 tonnes per year of advanced biochemicals. That's from sustainably sourced European hardwood. This creates demand for timber beyond traditional lumber and pulp markets.

Why it matters: Every successful bio-product sale proves the model works. Investors watch these milestones. Success at Leuna encourages similar investments elsewhere. Failure would set back the entire sector.

The forest connection: Biochemical demand creates new markets for hardwood. Forest owners gain another buyer. Diversified demand stabilizes prices. More uses for wood means more value from forests. Source: UPM Official Release | Lesprom Network

Europe's sawmill sector reshuffled dramatically in 2024-2025. Total deal value reached approximately €400 million. The industry looks different now than two years ago. We have covered this topic in issue #2 in summer, but as we sum up 2025 it is worth to point it out again because of its impact on the industry.

The biggest deal: Stora Enso bought Junnikkala for €137 million. That added 700,000 m³ of capacity. It's the largest disclosed transaction in the consolidation wave.

Baltic expansion: HS Timber Group made two acquisitions in Latvia. Combined capacity: 550,000 m³. Baltic states offer lower costs than Central Europe. Buyers are noticing.

Estonian merger: Combiwood acquired AS Toftan. The combined company now generates €276 million in revenue. Scale matters when margins are tight.

New entrant: Kronospan bought ZG Timber's Sebeș plant in Romania in March 2025. This marks Kronospan's first move into sawn timber production. They previously focused on panels. The acquisition saved 500 local jobs.

The new leader: Binderholz emerged as Europe's largest sawmill operator. They now control 4.5 million m³ capacity across 15 sawmills. That scale creates advantages in purchasing, logistics, and market access.

Why consolidation now: Margins collapsed. Weak construction demand met high log prices. Smaller mills can't survive. Larger players buy distressed assets. The strong get stronger.

Geographic shift: Deals cluster in Baltic states and Eastern Europe. Lower costs attract capital. Higher-cost regions in Germany and Austria face pressure. Expect more capacity to shift east.

What this means: Fewer, larger companies will dominate European sawmilling. Supplier relationships matter more when fewer buyers exist. Forest owners face concentrated purchasing power. Source: Fastmarkets Analysis

The European Forest Institute launched a new tool on December 16. The FoRISK Intelligence Hub provides free resources for managing forest risks across Europe.

What it offers: Guidelines, tools, case studies, and best practices. Coverage includes wildfires, windstorms, pests, diseases, and drought. Everything is open access.

Who it's for: Forest managers, policymakers, and practitioners across Europe. Anyone dealing with forest disturbances can use it.

The platform: FoRISK runs on the EU-Farmbook system. It's fully operational now. Not a pilot. Not a concept. A working tool you can use today.

Why now: 2025 was Europe's worst wildfire year ever. Over one million hectares burned. Insect damage is rising. Climate change makes forests more vulnerable. Managers need better tools.

The knowledge gap: Good practices exist in some countries. But information doesn't flow across borders. FoRISK creates a central library. Swedish windstorm experience becomes available to French managers. Spanish fire knowledge reaches Polish foresters.

How to use it: Visit the EFI website. Access the Hub. Search for your specific risk concern. Download relevant resources. Apply them to your forest.

The practical value: Risk management works better with good information. FoRISK provides that information for free. Use it before you need it. Preparation beats reaction. Source: European Forest Institute

The United Nations Economic Commission for Europe released its annual forecast on December 29. The report covers production and trade across Europe, North America, and Central Asia.

The headline number: Sawn softwood consumption in the UNECE region increased 1.4% in 2025. Further growth expected in 2026. The market is stabilizing after difficult years.

What this means: The worst may be over. Consumption growing—even slightly—beats consumption falling. Recovery is slow. But it's happening.

The construction factor: Building sector weakness continues affecting demand. But the report suggests improvement. Construction markets recovering would boost timber demand significantly.

Regional variation: Not all markets move together. Some regions show strength. Others lag. The UNECE covers 56 countries. Averages hide big differences.

Trade policy warning: Global trade uncertainties will persist. Tariffs, regulations, and geopolitical tensions affect timber flows. Plan for disruption to continue.

The strategic importance: The report emphasizes forests' role in infrastructure. Power grids need wood poles. Transportation needs timber. Defense needs forest products. Forests matter beyond just construction.

Where to find it: UNECE publishes the full report on their website. It's free. The data helps with planning and market analysis. Source: UNECE

January 24, 2026: PEFC field mission to Indonesia begins

Q1 2026: EU Carbon Removals Certification Framework applications open

Q1 2026: Verra enhanced review results for 45 projects (25.7M credits at stake)

H1 2026: UPM Leuna additional commercial products expected

December 30, 2026: EUDR deadline for large and medium operators

Check your certification's exposure to credibility risks. The PEFC Indonesia case shows how problems elsewhere affect your certified products' market value.

Twenty minutes, protective value:

Your certification is only as valuable as the market's trust in it. When problems emerge elsewhere in the system, you need answers ready. "We follow the rules" isn't enough if buyers doubt the rules work.

Know the controversies. Prepare your responses. Protect your market position before questions arrive.

Until Tuesday!

Wish you all the best: Peter

P.S. What’s the biggest challenge you’re facing in forestry right now?
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