A political agreement has been reached between the European Council and European Parliament on EU de-forestation-free supply chains regulations, the European Commission confirmed this morning.
The EU’s Commission has “welcomed” the agreement, which, once adopted, will ensure that a set of key goods placed on the EU market will no longer contribute to deforestation and forest degradation in the bloc and elsewhere in the world. This step is expected to help stop a significant share of global deforestation and forest degradation, in turn reducing greenhouse gas emissions and biodiversity loss.
This agreement comes just before the start of the Conference on Biodiversity (COP15) which is set to define protection goals for nature for the next decade.
When the new rules enter into force, all relevant companies will have to conduct strict due diligence if they place on the EU market, or export from it: palm oil, cattle, soy, coffee, cocoa, timber and rubber as well as derived products (such as beef, furniture, or chocolate). These commodities have been chosen on the basis of a thorough impact assessment identifying them as the main driver of deforestation due to agricultural expansion.
The agreement sees approval 12 months after the Commission’s 2021 proposal. The final version builds on the core features proposed by the Commission, namely: tackling deforestation regardless of whether it is legal or illegal; strict traceability requirements linking the commodities to the farmland where they were produced; and a country benchmarking system.
“Today’s political agreement on the EU’s deforestation law marks an important turning point in the global fight against deforestation. As we make the green transition in the European Union we also want to ensure that our value chains become more sustainable as well. Combatting deforestation is an urgent task for this generation, and a great legacy to leave behind for the next,” said Frans Timmermans, Executive Vice-President for the European Green Deal.
How will this impact businesses in the EU?
Firstly, operators and traders will have to prove that the products are both deforestation-free (produced on land that was not subject to deforestation after 31 December 2020) and legal (compliant with all relevant applicable laws in force in the country of production).
Secondly, companies will be required to collect precise geographical information on the farmland where the commodities that they source have been grown, so that these commodities can be checked for compliance. Non-compliance with the rules will lead to “effective and dissuasive” penalties.
The list of commodities that are covered will be regularly reviewed and updated, taking into account new data such as changing deforestation patterns.
The Commission will run a benchmarking system that will assess countries or parts thereof and their level of risk of deforestation and forest degradation – a high, standard or low risk – also taking into consideration agricultural expansion for the production of the seven commodities and derived products. Obligations for companies will depend on the level of risk. This will also help to guide the EU’s work together with partner countries on halting deforestation, while also paying particular attention to the situation of local communities and indigenous people.
Taking leadership on the global stage
The EU plans to step up its engagement, both bilaterally with producer and consumer countries and in relevant multilateral fora, to ensure the new law is effectively implemented and to assist producer countries where necessary. The new rules are also expected to help secure the livelihoods of millions of people, including indigenous peoples and local communities across the world, who rely heavily on forest ecosystems.
The European Council and European Parliament will now formally have to adopt the new regulation before it can enter into force. Once the regulation is in force, operators and traders will have 18 months to implement the new rules. Micro and small enterprises will be given a longer adaptation period, as well as other specific provisions.