This blog was updated on 12/01/2023 to reflect newly disclosed information on the inclusion of wooden seats and some processed beef in the text agreed by the European Council and Parliament on a new regulation on deforestation-free supply chains.

This morning the European Council and Parliament reached an agreement on a new regulation on deforestation-free supply chains.

The law seeks to minimise the EU’s impact on forest destruction worldwide by banning from the EU market products linked to deforestation. It imposes supply chain due diligence obligations on companies that import and trade forest risk commodities, such as cattle, soy and wood.

The regulation is a welcome and much needed step towards delinking global supply chains from deforestation and related human rights abuses. The final agreement was a compromise between contrasting priorities, with some important victories for forests but also some very disappointing outcomes. Below we highlight some of the key issues that Earthsight has campaigned on in recent years.

Mandatory public list of non-compliant actors

Earthsight has called for such a list for months due to its importance to the proper enforcement of the new law (explained in more detail here). A public list of non-compliant businesses can help address some of the weakness identified in the enforcement of the EU Timber Regulation (EUTR) and have a crucial deterrent effect on bad behaviour.

An informal summary of key points of the agreement seen by Earthsight suggests that a public list of companies that are penalised under the law has been included in the final text. It’s not yet clear whether this list will include companies that have been found non-compliant but not yet formally penalised – as advocated by Earthsight – or only companies that have been issued penalties or been through a judicial process.

Earthsight has argued for years that strong enforcement and dissuasive penalties will be vital for the effectiveness of any regulation. Without a mandatory name-and-shame list of wrongdoers, regardless of the levels of penalties imposed on them, the new EU law could begin its life already impaired. Earthsight will assess this provision of the final text once it’s published.

Enforcement and penalties

The new regulation is an improvement on the EUTR (which will be replaced by the new law). The agreed text requires a minimum of nine per cent of volumes of imported commodities and products as well as checks on nine per cent of EU importers for high-risk countries to be checked by competent authorities (CAs). This is more than the Council had initially wanted. Checks for low-risk and standard-risk countries were set, respectively, at one and three per cent of EU importers and exporters, still providing some minima to be followed by CAs and thus establishing an obligation to monitor the market.

Penalties may include a maximum fine of at least four per cent of a company’s annual turnover in the EU, as well as confiscation of products and revenues, temporary prohibitions and exclusion from public funding. While some of these may have a dissuasive effect, the law’s effectiveness will depend on how well enforced they are. In addition, it seems obligations to restore environmental damage or compensate communities affected by adverse impacts will not be part of the penalties regime.

Human rights

Despite strong campaigning by activists and groups around the world, including Earthsight, policymakers disappointingly did not ensure the protection of international human rights of indigenous people and other local communities. The agreed text merely mentions certain rights of indigenous peoples and local communities under national law, but does not list international human rights instruments, as had been proposed by the European Parliament. This means that if a country does not sufficiently protect these rights – such as tenure rights or the right to free, prior and informed consent (FPIC) – of indigenous peoples and other local communities, they will also not be protected under the regulation. This is a major flaw in the new law.

Earthsight’s There Will Be Blood and Grand Theft Chaco reports revealed how EU chicken and leather supply chains are tainted by indigenous land rights violations in Brazil and Paraguay. It is urgent that the EU take bolder action to halt its complicity in such abuses.

Product scope

After years of campaigning and exposés about the industry, leather was included in the scope of the new law. This is a great victory for forests and forest communities that have suffered the consequences of cattle expansion. Despite attempts by the industry to exclude leather from the regulation, EU institutions agreed with Earthsight and others that the sector desperately needs reform if it is to halt its contribution to forest destruction.

Charcoal and wooden seats were also included in the regulation’s scope. These are products that Earthsight has drawn attention to through exposés of their impacts on native forests. We have uncovered evidence that IKEA sold beech chairs in its German stores which were made from wood illegally felled in the forests of the Ukrainian Carpathians. Earthsight’s latest investigation connected the use of forced prison labour and destruction of some of Europe’s last primeval forests in Belarus to furniture – including chairs – sold at almost every major furniture retail chain in Europe.

Another partial but important victory was the inclusion of certain types of processed beef on the final list. Earthsight had advocated for such inclusion as some of the world’s largest meatpackers with close links to deforestation export significant volumes of canned beef to Europe.

Sadly though, poultry did not make it into the final agreement. Earlier this year Earthsight showed how chicken linked to soy growers implicated in egregious indigenous rights violations makes its way into pet food found on the shelves of big-name supermarkets in the EU.

More work to be done

Parliament and the Council will have to formally approve the agreement in the coming weeks or months. Most of the law’s requirements and obligations will apply 18 months after its publication in the EU Official Journal. The new law goes some way in addressing some of the most pressing issues, but further work remains to be done.

Other large consumer markets, such as the UK and US, must follow suit and enact similar rules as a matter of urgency.

Over the coming years, the EU must use expected review processes of its new law to further strengthen it. It must include other wooded land and ecosystems other than forests in the law’s scope and regulate the finance sector, which profits from and contributes to forest destruction and related human rights abuses. It must also strengthen human rights provisions to demand compliance by businesses with internationally recognised standards. Stakeholders affected by the negative impacts of supply chains need clear and accessible access to justice and the necessary support to seek and obtain remedy to damage caused. More commodities and derived products need to be added in upcoming reviews, such as poultry.

Above all, enforcement will be key. Authorities in charge must have the necessary resources and expertise to do their job. Dissuasive penalties must be applied consistently and without delays. Substantiated concerns submitted by civil society, communities and other relevant actors must be acted upon. Flawed voluntary certification schemes cannot be relied upon to demonstrate compliance with the law.

Only when strong enforcement of well-designed laws is in place will the world’s forests and their peoples be able to thrive and continue to provide their invaluable environmental and social contributions to all.