"New proposed EU law to tackle global deforestation lacks ambition on finance and human rights", 17 November 2021

The proposed law, published today, aims to prevent products linked to deforestation and forest degradation being consumed in the EU, such as soy, beef, palm oil, timber, coffee and cocoa by requiring companies and traders to check and mitigate such risks in their supply chains.

The situation is urgent, with deforestation a key driver of the climate crisis – if deforestation were a country, it would rank third in CO2 emissions, after China and the US. The EU has an outsized role in global deforestation in international trade.

Key measures in the proposal include:

• An explicit focus on environmental sustainability of products on the EU market, which doesn’t rely on varying national definitions of “legal” or “illegal” deforestation and instead includes all deforestation.
• Due diligence requirement: businesses would be required to show that the risks of deforestation and forest degradation have been mitigated prior to placing a product or commodity on to the EU market.
• Mandatory traceability requirements including geo-localisation of the point of origin of the product, thus allowing identification of where commodities were harvested and produce.
• Enforcement mechanisms, including sanctions to ensure that those responsible for not complying with the law are held accountable.

The Commission has also listened to the evidence and not relied on certification schemes that would have given a green lane for industries to sidestep due diligence obligations.

However, the current proposal contains some critical loopholes, which risk undermining the proposed law. For the regulation to be an effective tool to combat the climate and ecological emergencies we are facing, the European Parliament and Council must address the following problems:  

• Human rights and protections for Indigenous Peoples. The draft fails to respect international human rights standards and does not mention protection for Indigenous Peoples’ rights and the obligation for operators to obtain their Free, Prior and Informed Consent (FPIC). [1]
• No rules for the financial sector. The draft law does not cover EU financial institutions and suggests that other existing EU tools are “well suited” to address the financing that goes into deforestation. However, those tools have no accountability mechanisms to prevent banks or investors to continuously making problematic deals with harmful agribusinesses.  Global Witness’s recent investigation, Deforestation Dividends, showed how EU banks and investors have raked in €401 million in deforestation-linked revenues off the back of €30.6 billion worth of deals with agribusiness companies linked to the destruction of climate-critical forests and human rights abuses. [2]
• No redress for affected communities. The law fails to include mechanisms for communities harmed by non-compliance with the law to claim redress and remedy. The law should include civil liability provisions so that communities whose rights have been violated can bring legal claims against the businesses responsible.
• Omission of key commodities linked to deforestation, such as rubber and maize.
• Exclusion of deforestation in savannahs and peatlands, which could lead to deforestation pressure shifting away from forests and towards these other critical ecosystems...