Vulcan Insight | EU finalises legislation to reduce deforestation worldwide 

On 6 December, the Council of the EU and European Parliament came to a provisional agreement on a proposal to minimise the risk of deforestation and forest degradation associated with goods that are either imported or exported to the EU.

As such a large consumer and trader of commodities that play a very substantial role in global deforestation, this move by the EU has been warmly welcomed by many. According to the UN’s Food and Agriculture Organisation (FAO), an area larger than the EU was lost to deforestation between 1990 and 2020. Having caused approximately 10% of the losses, EU consumption played a large role in this devastating trend. This political step will thus, help stop a significant share of global deforestation and degradation.

The WWF described it as a “historic” deal and a “victory” for the world’s forests, people and wildlife. Furthermore, this deal came just days before the Conference on Biodiversity (COP 15) which will seek to define protection mechanisms and goals for nature.

The Commission welcomed the political agreement reached between the Council and Parliament this week, which came just one year after it first presented the proposal. The agreed text strengthens the core features of the Commission’s initial proposal. More concretely, it tackles deforestation regardless of whether it is legal or illegal, strict traceability requirements linking the commodities to the source where they were produced will be introduced and a country benchmarking system will be established.

Once this new law is eventually adopted, it will ensure that certain goods placed on the EU market no longer contribute to deforestation and forest degradation in the EU, as well as elsewhere in the world.

Under the new law, known as EU Regulation on Deforestation-Free Supply Chains, all operators and traders that make available or export certain goods to the EU market will be obliged to carry out strict due diligence. These goods include palm oil, beef, timber, coffee, cocoa, rubber, and soy. The Regulation will also apply to various derived products including chocolate, furniture, printed paper, and selected palm oil-based derivatives. Other key elements included in the new Regulation are as follows:

• A definition for deforestation, based on a definition from FAO.
• The establishment of a benchmarking system which assigns to third and EU countries a level of risk related to deforestation and forest degradation. The risk level, low, standard, or high, will determine the level of obligations for authorities to carry out investigations.
• Competent authorities have been tasked to carry out checks on 9% of operators and traders trading products from high-risk countries, 3% for standard-risk countries and 1% from low-risk countries.
• Human rights issues linked to deforestation, particularly in relation to indigenous peoples.
• Provisions regarding effective and proportionate penalties and cooperation with partner countries.

Before the Regulation can enter into force, the European Parliament and the Council will have to formally adopt the new Regulation. Once implemented, operators and traders will have 18 months to implement the new rules. Notably, micro and small enterprises will be granted a longer adaptation period. A review of the Regulation and its impacts will be carried out in two years to assess if any other products need to be covered.

Compliments of Vulcan Consulting – a member of the EACCNY.