How to move companies to source responsibly? German implementation of the European Timber Regulation between persuasion and coercion

Mitigating international trade in illegally harvested wood (products) is an international priority. To support this priority, the European Timber Regulation prohibits placing illegally harvested or traded timber on the EU market, requiring companies to undertake due diligence in sourcing wood (products). To take effect, this regulation needs to be implemented in all European member states. Although Germany is one of the first member states to transpose and enact the regulation's provisions, its implementation has recently been portrayed as “weak” and ineffective. This article aims to answer why this perception emerged. It scrutinizes implementation performance of the EUTR in Germany. Based on rich empirical data from stakeholder interviews, documents, and participant observation, this study argues that EUTR performance in Germany is not generally perceived as ineffective. Instead, stakeholder perceptions vary. As stakeholders face major uncertainties connected to market structure and company behaviour, they tend to base their assumptions about the implementation process on two major heuristics. Both focus on the question how to change company behaviour. One stresses the need to pursuade companies to comply, the other stresses the need to coerce them. These heuristics are based on the two larger objectives pursued by different stakeholder groups during policy making of the EUTR: (1) global sustainable forest management and (2) image improvement of the EU wood importing industry. Based on these different policy objectives, the EUTR does not provide clear guidance on which policy instruments should be given priority. As a consequence, national implementation is turned into a policy-making process. The outcome of this struggle will likely affect the future trajectory of EUTR implementation in other EU member states and in countries exporting wood into the EU.