- On 9 December, the UK government announced initial details of its long expected deforestation legislation
- While the announcement confirmed that beef, leather, cocoa, palm, and soy will be covered by the law, its effectiveness is being put at risk by a £50m annual turnover threshold and 500-tonne trade volume exemption
- It remains unclear when the law will come into force. An unambitious timeline would have severe consequences for the world’s climate
More than two years ago, the UK Parliament passed the Environment Act 2021, Schedule 17 of which requires regulated businesses to establish and implement a due diligence system for certain commodities and derived products that they use in their UK commercial activities. Some elements of the secondary legislation which operationalise these rules were finally announced on Saturday at COP28, but crucial details remain unclear.
The government announced that non-dairy cattle products (beef and leather), cocoa, palm, and soy will be covered by the law. Other high-risk commodities, such as coffee, maize and rubber will not be included.
The law's effectiveness in cutting UK consumers' complicity in illegal deforestation in source countries is being put at risk by the introduction of business turnover thresholds and trade volume exemptions. The rules will only apply to companies with a global turnover of over £50m, the UK government announced. Companies using commodities that do not exceed the annual volume threshold of 500 tonnes can also be exempt from the rules.
The policy details follow a 2021 consultation on the implementation of the rules. In the consultation, the Department for Environment, Food and Rural Affairs (Defra) considered proposed business size exemption options ranging from £50m to £200m. Defra also proposed options of minimum trade volumes, ranging from one to 1,000 tonnes.
Any company exemptions and thresholds to the law create loopholes and seriously reduce its effectiveness. While it is welcome that Defra has chosen the lowest of the company size thresholds included in its consultation, Earthsight’s
past analysis has shown that even a turnover threshold of £50m would exclude several of the largest UK importers of beef, leather, soy and palm oil.
Any thresholds also open up opportunities for abuse. For instance, companies may try to circumvent regulation by setting up a complex web of subsidiaries to avoid meeting the thresholds.
Earthsight knows from past experience investigating timber and agribusiness supply chains that firms actively seek ways to evade regulatory obligations as much as possible. Some of the largest firms
involved in importing chicken to the UK, for example, use more than 100 small subsidiaries to do so, and even appear to be using such subsidiaries for single shipments before dissolving them and creating new ones.
The government’s announcement also mentions a “grace period to prepare for regulation before the beginning of the first reporting period,” but does not provide any concrete timelines. In Defra’s 2021 consultation, it was suggested that implementing the law for one commodity would take 18 months, while implementing it for seven would require four years. This was not mentioned in the latest announcement, but an unambitious approach would have a huge negative effect on illegal deforestation.
It could take two to four years after the law takes effect for enforcement authorities to learn how best to do their new job. Thus, the real gap between the law being passed and being properly enforced will be even greater than the grace period. That would be too late to have any meaningful effect on achieving UK and global climate goals.
Other omissions from the announcement are the timelines for considering the addition of new commodities to the legislation, as well as the plans for enforcement mechanisms. These details remain unclear and a cause for concern.
