European Commission speaks out on agreement involving deforestation-free supply chains

The European Commission welcomed the interim political agreement that has just been reached between the European Parliament and the Council on an EU regulation on deforestation-free supply chains. Once adopted and implemented, the new law will ensure that a set of key goods placed on the European Union (EU) market will no longer contribute to deforestation and forest degradation in the EU and other parts of the world.

As the EU is a major economy and consumer of these commodities, this step will help halt a significant part of global deforestation and forest degradation, in turn reducing greenhouse gas emissions and biodiversity loss. This agreement comes just before the start of the Biodiversity Framework Conference (COP15), which is set to define nature protection goals for the coming decades. (COP15 takes place from December 7 to 19, 2022, in Montreal, Canada.)

When the new rules come into force, all relevant companies will have to carry out due diligence if they place themselves on the EU market, or export from it: palm oil, livestock, soya, coffee, cocoa, timber and rubber, as well as products derivatives (such as beef, furniture or chocolate). These commodities were chosen based on a thorough impact assessment identifying them as the main driver of deforestation due to agricultural expansion.

The political agreement comes just 12 months after the Commission's 2021 proposal. The final version is based on the main features proposed by the Commission, namely: combating deforestation regardless of whether it is legal or illegal; strict traceability requirements linking commodities to the farmland where they were produced; and a national benchmarking system.

New due diligence rules for companies

The new regulation establishes mandatory due diligence rules for companies wishing to place relevant products on the EU market or export them (click here to find out more about European Union standards). Operators and traders will have to prove that products are deforestation-free (produced on land that was not subject to deforestation after December 31, 2020) and legal (in compliance with all relevant applicable laws in force in the country of production).

Companies will also be required to collect precise geographic information about the agricultural land where the commodities they purchase were grown, so that those commodities can be checked for compliance. Member States must ensure that non-compliance with the rules leads to effective and dissuasive sanctions.

The list of commodities that are covered will be reviewed and updated regularly, taking into account new data such as changing deforestation patterns.

The Commission will administer a benchmarking system that will assess countries or parts of them and their level of risk of deforestation and forest degradation - a high, standard or low risk - also taking into account agricultural expansion for the production of the seven commodities and derived products. Business obligations will depend on the level of risk. This will also help guide the EU's work with partner countries to halt deforestation, while paying particular attention to the situation of local communities and indigenous peoples.

Internationally, the EU will intensify its engagement, both bilaterally with producing and consuming countries and in relevant multilateral forums, to ensure that the new law is effectively implemented and to assist producing countries where needed. The new rules will not only reduce greenhouse gas emissions and biodiversity loss, but will also help secure the livelihoods of millions of people, including indigenous peoples and local communities around the world, who rely heavily on forest ecosystems.

Next Steps

The European Parliament and the Council will now have to formally adopt the new regulation before it can come into force. Once the Regulation is in force, operators and traders will have 18 months to implement the new rules. Micro and small companies will have a longer adaptation period, as well as other specific provisions.

Background

Deforestation and forest degradation are important drivers of climate change and biodiversity loss – the two main environmental challenges of our time. The Food and Agriculture Organization of the United Nations (FAO) estimates that 420 million hectares of forest - an area larger than the European Union - were lost to deforestation between 1990 and 2020. In terms of net area loss (the difference between area of ​​deforested forest and new surface of planted or regenerated forests), FAO estimates that the world lost around 178 million hectares of forest cover in the same period of time, which is an area three times larger than that of France.

The Intergovernmental Panel on Climate Change (IPCC) estimates that 23% of total anthropogenic greenhouse gas emissions (2007-2016) come from agriculture, forestry and other land uses. About 11% of total emissions come from forestry and other land uses, most from deforestation, while the remaining 12% are direct emissions from agricultural production, such as livestock and fertilizers.