European Parliament votes in favour of strong deforestation-free products law

MEPs have voted to strengthen key elements of a planned EU regulation on deforestation-free supply chains.

The aim of the law, which was proposed by the European Commission in November 2021 and voted on yesterday, is to minimise the EU’s impact on forest destruction worldwide by banning from the EU market products linked to deforestation and international human rights violations. The law seeks to impose supply chain due diligence obligations on companies that import and trade forest risk commodities, such as cattle, soy and wood.

EU consumption is a major driver of global deforestation. It is the world’s second largest importer of tropical deforestation and associated emissions after China and is responsible for 10 per cent of worldwide deforestation associated with production of goods or services.

On 12 July, the European Parliament Committee on the Environment, Public Health and Food Safety (ENVI) adopted its report on the Commission's proposal, suggesting significant improvements to the text. MEPs in the plenary voted to safeguard almost all of these improvements. The plenary adopted its position with 453 votes against 57, and 123 abstentions.

On 28 June the Council adopted its position on the Commission’s Proposal, which is much weaker. Now the Council, European Parliament and Commission will negotiate the final law in trilogues which are expected to conclude before the end of the year. For the regulation to be effective, the Council will need to follow Parliament‘s progressive lead.

Below we highlight some of the key topics voted on.

Enforcement mechanisms

The Parliament voted to strengthen the proposal's enforcement mechanisms, which would help ensure that the law will actually work in practice.

MEPs agreed on a mandatory public list of non-compliant businesses, which would essentially name and shame companies that break the law.

Earthsight has previously argued that such a list would provide a powerful additional incentive for compliance and be less dependent on national enforcement authorities’ willingness to impose dissuasive penalties. It is therefore essential that the European Parliament convinces the Council to adopt its position on a mandatory public list of non-compliant businesses in the trilogues.

MEPs voted to increase the number of checks competent authorities would have to carry out annually, from 15 per cent to 20 per cent for operators importing from high-risk countries, and from 5 per cent to 10 per cent for standard-risk countries. They also voted to introduce a 5 per cent minimum for checks from low-risk countries. The Council had decreased the number of checks required in its position, including for high-risk countries, which could seriously undermine the effectiveness of the law.

The Council had also removed due diligence obligations for large traders, such as major retailers and supermarkets. Earthsight and other NGOs have argued to policymakers that due diligence requirements for large traders are key for the proposed deforestation-free products regulation’s effectiveness and enforceability. The Council should therefore drop its position on this topic during final negotiations on the law.

Product scope

In recent weeks industry lobbied hard to get MEPs to remove leather from the regulation’s scope. In a big win, and following intense campaigning by Earthsight and other organisations, MEPs voted to keep leather in the regulation recognising its proven link to deforestation. This is in line with the Council’s position on the commodity.

However, the plenary went further and also voted to expand the law to cover swine, sheep and goats, poultry, maize and rubber, thereby including key contributors to deforestation. Charcoal was also added to the list of wood products that would be covered by the regulation, as were a number of additional processed beef products.

In May Earthsight’s There Will Be Blood report, which exposed how chicken fed with soy linked to indigenous rights abuses and deforestation entered the EU market, had called for the inclusion of soy-fed chicken in the regulation. Our previous research had also shown the importance of regulating charcoal and processed beef.

International human rights

While the Commission’s proposal failed to include specific references to international human rights, the plenary voted in favour of requiring companies that place or export goods from the EU market to ensure compliance with human rights protected under international law, including customary tenure rights and the right to free, prior and informed consent (FPIC).

Under the international legal framework, FPIC is a right pertaining to indigenous and tribal peoples, allowing them to give or withhold consent to a project that may affect them or their territories.

The Council’s position also includes an obligation for companies to assess not only national laws but labour and human rights protected under international law, though it could be strengthened further by adopting the Parliament’s position.

MEPs did not agree on setting up a remediation fund, whereby communities affected by deforestation would be able to seek redress. The amendment had previously been rejected in ENVI but had been re-introduced by the Greens/European Free Alliance and The Left political groups.

Earthsight’s There Will Be Blood report also revealed how supermarkets, fast food restaurants and pet food retailers in Europe are linked to indigenous rights abuses in Brazil and called on policymakers to include the strongest possible provisions on indigenous land rights in the upcoming regulation.

This January, more than 190 indigenous, environmental and human rights groups had called for the inclusion of a requirement for businesses to respect land rights as part of the EU regulation.

Certification schemes

Third-party voluntary certification schemes were not given a ‘green lane’ in the Commission’s proposal, meaning that companies would not be able to rely on so-called green labels in lieu of conducting their own due diligence. However, under the proposal, companies would be able to use information supplied by such schemes as “complementary information” provided that it meets the due diligence information requirements set out in the regulation.

Amendments tabled to provide a greater role to certification schemes, for example by removing the indispensable safeguard that any additional information provided by such schemes ought to meet the information requirements of the law, were rejected by MEPs. This is crucial to ensure the effective functioning of the law and follows the Council’s position on the topic. It should therefore be maintained in the final law.

Earthsight has repeatedly exposed how the wood certification scheme Forest Stewardship Council (FSC) has accredited goods linked to illegalities, for instance in Russia and Ukraine, and has therefore argued that a reliance on these schemes in the upcoming regulation would seriously undermine its effectiveness.

Other ecosystems

The Commission’s proposal would only apply to forests based on the Food and Agriculture Organization of the United Nations (FAO) definition, but not to other ecosystems.

In a positive step, the plenary followed ENVI’s report and voted to add “other wooded land” as defined by FAO to the deforestation definition. While this does not provide full protection to other ecosystems, it would go a long way to improve the protection of some biomes. A Trase analysis shows that it would decrease “the Cerrado area unprotected by the legislation from 74 to 18 per cent, and the Gran Chaco from 33 to 24 per cent.”

The Council should now move to adopt the Parliament’s addition of wooded lands to the forest definition.

Unfortunately, neither the Council nor the ENVI Committee added other ecosystems such as peatlands, savannahs or wetlands to the scope of the regulation, exposing invaluable biomes like parts of the Chaco and Cerrado to great risk. This is despite overwhelming public support for strengthening the law to cover critical ecosystems other than forests.

Financial institutions

The plenary also moved to add due diligence obligations for financial institutions to the regulation text in order to prevent financing of deforestation. Due diligence obligations for the financial sector had not previously been included by the Commission or in the Council’s position despite being advocated for by a number of NGOs. As such, the Council should change its position and ensure the inclusion of the finance sector in the law.