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The New EU Deforestation Regulation

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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 overall emissions are from forestry and other land use, mostly deforestation, while the remaining 12% are direct emissions from agricultural production such as livestock and fertilizers.

Sep 13, 2022, EU MEPs adopted its position on the Commission proposal for a regulation on deforestation-free products. The new law would make it obligatory for companies to verify (so-called “due diligence”) that goods sold in the EU have not been produced on deforested or degraded land anywhere in the world. This would guarantee consumers that the products they buy do not contribute to the destruction of forests, including of irreplaceable tropical forests, and hence reduce the EU’s contribution to climate change and biodiversity loss.

The new deforestation Regulation will:

  • Guarantee to EU citizens that the listed products they buy, use and consume do not contribute to global deforestation and forest degradation.

  • Reduce carbon emissions to the atmosphere due to EU consumption and production of the relevant commodities by at least 32 million metric tons a year. This would save at least €3.2 billion annually and enhance the contribution of forests to tackle climate change.

  • Address illegal deforestation and for- est degradation, as well as any deforestation due to agricultural expansion caused by the production of the commodities.

Companies placing products on the EU market will:

  • Collect relevant information about commodities and products to ensure they have not been produced on land deforested or degraded after 31 December 2020.

  • Exercise mandatory due diligence and analyse and evaluate risks in their supply chain.

  • Take adequate and proportionate mitigation measures, such as using satellite monitoring tools, field audits, capacity building of suppliers or isotope testing to check the origin of the product.

Products covered by Anti-Deforestation Rules:

Palm oil | Beef | Soy | Coffee | Cocoa | Wood

Parliament also wants pigmeat, sheep and goats, poultry, maize, rubber, charcoal and printed paper products covered by the new rules.

MEPs ask companies to verify that goods are produced in accordance with human rights provisions in international law and respect the rights of indigenous people. While no country or commodity will be banned, companies placing products on the EU market would be obliged to exercise due diligence to evaluate risks in their supply chain. They can for example use satellite monitoring tools, field audits, capacity building of suppliers or isotope testing to check where products come from. EU authorities would have access to relevant information, such as geographic coordinates. Anonymised data would be available to the public. Based on a transparent assessment, the Commission would have to classify countries, or part thereof, into low, standard or high risk within six months of this regulation entering into force. Products from low-risk countries will be subject to fewer obligations.

Next steps: Parliament is now ready to start negotiations on the final law with EU member states.

Companies should start looking for supply chain risk management strategies, and policy upgrade, and assess potential data vendors for sustainability due diligence and assess exposures to prioritize compliance requirement across value chains.

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