Why the EU is forcing businesses to tackle deforestation

New EU leg­is­la­tion marks a glob­al first in the bat­tle against defor­esta­tion, tar­get­ing all aspects of the prob­lem, not just ille­gal exam­ples. The pro­posed law has been wide­ly wel­come by cam­paign­ers, though some won­der if it goes far enough.  

Tack­ling defor­esta­tion is a cen­tral pil­lar of the EU’s plan to tack­le the cli­mate cri­sis. In Novem­ber, the Euro­pean Com­mis­sion (EC) pro­posed draft leg­is­la­tion that would ban all beef, palm oil, cocoa, cof­fee, soy and wood prod­ucts that are linked to defor­esta­tion – and those derived from them – from enter­ing the trad­ing bloc.

If sup­port­ed by the Euro­pean Par­lia­ment and the Coun­cil of the EU, it could become law by the end of 2022 or ear­ly 2023. It’s impor­tant because it would cov­er all defor­esta­tion, not just that deemed ille­gal in the coun­try of ori­gin, as was the case in the UK’s recent Envi­ron­ment Bill.

The response to the draft law from NGOs has been broad­ly pos­i­tive. Nico Muzi is Europe direc­tor for the envi­ron­men­tal advo­ca­cy organ­i­sa­tion Mighty Earth. He notes that although the reg­u­la­tion has been a long time com­ing, hav­ing been first dis­cussed in 2008, it is nonethe­less vision­ary.

“It’s a world first in terms of address­ing the respon­si­bil­i­ty of Euro­pean con­sumers in dri­ving defor­esta­tion, both legal and ille­gal,” he says. “That sets a big prece­dent, as it’s say­ing there is no ‘legal’ defor­esta­tion. Any defor­esta­tion is a vio­la­tion … it goes beyond the legal­i­ty of the [ori­gin] coun­try.”

Michael Rice, for­est-risk com­modi­ties lawyer at envi­ron­men­tal law char­i­ty Clien­tEarth, is also sup­port­ive of the draft law. “The EU is the world’s sin­gle largest mar­ket, so it’s a mas­sive sig­nal to the agri­cul­ture sec­tor glob­al­ly that we can’t car­ry on with busi­ness as usu­al,” he says.

Rice is impressed with the manda­to­ry due dili­gence embed­ded in the reg­u­la­tion, which includes a require­ment for com­pa­nies to pro­vide the exact loca­tions of the farms where they source their prod­ucts.  “It’s a big step for­ward in terms of glob­al envi­ron­men­tal gov­er­nance, what we call full sup­ply chain trace­abil­i­ty,” he says. It means com­pa­nies can no longer get away with blind spots in their sup­ply chain.

For Rice, it appears the EC learnt good lessons from pre­vi­ous EU reg­u­la­tion on ille­gal tim­ber, which had some ambi­gu­i­ty in terms of com­pli­ance that made it hard­er to police. Enforce­ment will now be in the hands of the mem­ber states, each of which must set up agen­cies to mon­i­tor com­pli­ance with the law.

Challenges ahead 

Despite the wide­spread sup­port, there are some crit­i­cisms of the leg­is­la­tion. It doesn’t include oth­er sig­nif­i­cant defor­esta­tion-risk com­modi­ties like rub­ber and maize, for exam­ple, and only applies to defor­esta­tion in actu­al forests. 

“It doesn’t cov­er oth­er types of ecosys­tems that are both high car­bon stores and habi­tats for lots of bio­di­ver­si­ty,” Muzi explains. Mighty Earth and oth­er Euro­pean NGOs “are push­ing to extend this part of the reg­u­la­tion to cov­er specif­i­cal­ly savan­nahs, wet­lands and peat­lands”.

Lots of South­east Asian palm oil is grown in for­mer peat­lands, not forests, Muzi says. These are huge car­bon and methane sinks, so it doesn’t make sense to leave them out of the leg­is­la­tion. The same goes for soy, which is grown exten­sive­ly in the Cer­ra­do Savan­na in Brazil.

“[The leg­is­la­tion] was polit­i­cal­ly very com­pli­cat­ed, so they want to get it right and address for­est loss first, then move on to oth­er ecosys­tems,” Muzi says. But he notes there is a review clause after two years, where the EC will test the impact and fea­si­bil­i­ty of includ­ing oth­er ecosys­tems.

The law has also been crit­i­cised for not includ­ing the human rights fall­out from defor­esta­tion. “Chop­ping down trees often goes hand in hand with land grab­bing and very sig­nif­i­cant and long-last­ing human rights impacts for indige­nous peo­ple and local com­mu­ni­ties in for­est areas,” says Rice.

Until now, com­pa­nies trad­ing in for­est-risk com­modi­ties could rely on vol­un­tary third-par­ty cer­ti­fi­ca­tion schemes to vouch for their prod­ucts’ sus­tain­abil­i­ty. But the sys­tem wasn’t work­ing well enough, hence the need for EU law.

Still, the com­pa­nies that engaged with vol­un­tary cer­ti­fi­ca­tion schemes until now and tried to make their sup­ply chains more trans­par­ent and trace­able will be at an advan­tage mov­ing for­wards.  

“This law will lev­el the play­ing field and the fron­trun­ners will ben­e­fit because they now won’t be penalised for tak­ing the step [to make their sup­ply chains more sus­tain­able] because every­one will have to do it on a mar­ket-wide basis, and that extra cost will be dilut­ed by so many con­sumers [450 mil­lion in Europe],” says Muzi.

Business impact

Many busi­ness­es want­ed the law and in fact lob­bied for it. A Unilever spokesper­son says: “We have long been call­ing for manda­to­ry, EU-wide due dili­gence leg­is­la­tion cov­er­ing envi­ron­men­tal impacts, land, human and labour rights. The ini­tia­tive is ful­ly in line with our defor­esta­tion-free sup­ply chain com­mit­ment.”

Cathryn Hig­gs, head of food pol­i­cy at The Co-op, had hoped the UK’s Envi­ron­ment Bill would be more in line with the EU’s draft law in terms of includ­ing ille­gal and legal defor­esta­tion. “We have pub­licly urged the UK gov­ern­ment to set robust due dili­gence require­ments as part of the Envi­ron­ment Bill, reflect­ing some of the ele­ments of the EU’s draft such as cov­er­ing both legal and ille­gal defor­esta­tion and con­ver­sion across all ecosys­tems,” she says. “It’s vital to cre­ate a lev­el play­ing field, so that all busi­ness­es of all sizes and sec­tors are expect­ed to con­duct mean­ing­ful due dili­gence when sourc­ing at-risk for­est com­modi­ties.”

As a result of the EU law, com­pa­nies will have more lever­age with sup­pli­ers to make their sup­ply chains more sus­tain­able. “Every com­pa­ny in Europe trad­ing in these com­modi­ties [will be] ask­ing all of their sup­pli­ers to deliv­er that trace­abil­i­ty at the same time and that is real­ly going to dri­ve change at the glob­al lev­el,” says Rice.

Does this mean we’re like­ly to see more region­al boy­cotts or busi­ness­es ban­ning cer­tain prod­ucts, such as palm oil, from their sup­ply chain? Boris Saraber is direc­tor of oper­a­tions at the envi­ron­men­tal non-prof­it Earth­worm, which works with large cor­po­ra­tions includ­ing Nestlé and Col­gate. He isn’t sure that’s the best approach.

“There is a point at which you need to take action to de-link from sup­pli­ers who are not engaged to build change,” he says. How­ev­er, if you’re sourc­ing from a cer­tain region, there are like­ly to be many raw mate­ri­als sourced from that area, “so you’re much bet­ter off using respon­si­ble pur­chas­ing pow­er to build long-term change in that region.”