EU Legislators Agree on Rules Prohibiting Products Linked to Deforestation

Today, the European Parliament and the European Council announced an agreement on legislation promoting deforestation-free supply chains, with the objective of guaranteeing that items imported to or exported from EU markets no longer contribute to global deforestation and forest degradation.

The announcement represents a significant step in the creation of laws to effectively ban deforestation-linked products on the EU market, as well as the establishment of stringent compliance requirements for companies providing or utilizing key commodities and products such as palm oil, beef, timber, coffee, cocoa, rubber, and soy. Beef, furniture, and chocolate are among the derived products included in the new guidelines.

The Czech Minister of the Environment, Marian Jureka, stated:

"The European Union is a major consumer and trader of commodities that contribute significantly to deforestation, such as beef, cocoa, soy, and lumber. The new regulations aim to ensure that consumers do not contribute to the continued degradation of forest ecosystems by purchasing these products.

According to the Food and Agriculture Organization of the United Nations (FAO), an estimated 420 million hectares of forest, an area greater than the European Union, were lost to deforestation between 1990 and 2020, with EU consumption accounting for around 10% of worldwide deforestation.

A recent analysis by the UN-backed Race to Zero indicated that deforestation attributable to corporations with land-based value chains, particularly in the forest, land, and agriculture sectors, is a significant contributor to global greenhouse gas (GHG) emissions. The sectors are responsible for 22% of world emissions, of which 50% are caused by deforestation.

Under the agreed-upon rules, companies that want to place relevant products on the EU market or export them will be subject to mandatory due diligence rules, including a requirement to trace the products back to the plot of land where they were produced, to demonstrate that they were produced on land that was not subject to deforestation after 2020, and to be in compliance with all applicable laws in the country of production.

The agreement also specifies consequences for noncompliance, including fines proportional to the environmental harm and the value of the relevant commodities or products, as well as temporary exclusion from public procurement and access to public funds.

Executive Vice President of the European Green Deal Frans Timmermans stated:

"As the European Union undergoes a green transition, we also want to ensure that our value chains become more sustainable. Combating deforestation is an important job for this generation and a lasting legacy for the next."

After formal acceptance by the EU Council and Parliament, the new regulation will enter into force, giving operators and dealers 18 months to apply the new requirements, with a longer implementation period for smaller businesses.