‘Full of more holes than Swiss cheese’? Europe accused of watering down its deforestation due diligence regulation

By Katy Askew

- Last updated on GMT

Is the European Council watering down the bloc's deforestation due diligence proposals? / Pic: GettyImages-Stockbyte
Is the European Council watering down the bloc's deforestation due diligence proposals? / Pic: GettyImages-Stockbyte

Related tags deforestation Due diligence

The European Council has backed Commission proposals designed to combat deforestation linked to consumer goods sold in the region – but with some important carve-outs. As environmentalists accuse EU Environment Ministers of ‘significantly watering down’ the initiative, we look at whether the latest proposals can still help stamp out deforestation linked to commodities like palm oil, beef, cocoa, coffee and soy.

This week, European Union Environment Ministers adopted their opinion on the deforestation-free regulation proposed by the Commission in November last year.

In its negotiating position, the Council – which represents the governments of Member States – agreed to set mandatory due diligence rules for all operators who sell products containing palm oil, beef, timber, coffee, cocoa and soy in the EU market and those whose production lies in the EU with goods exported to third party countries. The scope of finished products ranges from chocolate to leather and furniture. It covers key commodity inputs for the food industry including palm oil, beef, cocoa, coffee and soy. 

The ambition is to stamp out the deforestation that occurs not only in Europe but in the supply chains that feed into value-added products manufactured in and for European markets.

“We must ensure that the products we consume at home do not contribute to depleting the planet's forest reserves. The innovative text that we have adopted will make it possible to combat deforestation, within the European Union but also outside of it. This is a major step forward which also illustrates our ambition for the climate and for biodiversity,”​ said Agnès Pannier-Runacher, French minister for the energy transition.

However, the Council has made a number of alternations to the original EC proposal that have not been well received by deforestation campaigners. 

Council backs 'simplified' requirements for business 

Responding to the concerns expressed by industry lobbyists, the Council said it has focused on a ‘simplified and clarified the due diligence system’, while also preserving ‘a strong level of environmental ambition’.

The streamlined position avoids ‘duplication of obligations’ and ‘reduces administrative burden for operators’ as well as the enforcement authorities of Member States, it claimed. In a nod to the additional constraints faced by small- and medium-sized businesses, the Council has also set out the option that small operators will be able to rely on larger operators to prepare due diligence declarations.

The Council agreed to set up a benchmarking system, which assigns a level of deforestation risk to sourcing regions (low, standard or high). The risk category would determine the obligations for operators and enforcement authorities to carry out inspections and controls. This would mean an enhanced monitoring for high-risk countries and 'simplified' due diligence for low-risk countries, the Council said.

The position also modified the definition of ‘forest degradation’ to mean structural changes to forest cover, taking the form of the conversion of primary forests into plantation forests or into other wooded land.

Finally, the Council said it 'strengthened' the human rights aspects of the text.

Placing indigenous rights at the heart of due-diligence requirements

Nicole Polsterer, Sustainable Consumption and Production Campaigner, at forest and rights NGO Fern, insisted it is vital for human rights to be front-and-centre of any EU regulation targeting deforestation in markets outside the EU.

"Hopes of ending the ongoing destruction that EU consumption has unleashed in forests around the world, have edged closer today. Yet to become a reality, the rights of people who depend on forests for their livelihoods - and who are the best proven defenders of them - need greater protection,”​ she stressed.

While Member States referenced key international texts, such as the UN Declaration on the Rights of Indigenous Peoples, and called on companies to give greater consideration to international human rights standards, Fern said it is concerned this will be ‘honoured more on paper than in practice’. The NGO pointed to the EU Timber Regulation that, it said, demonstrates Member State enforcement agencies ‘fail to check’ for violations of international law.

Fern is also concerned that the Council has removed the already ‘very weak’ provisions on access to justice that were present in the Commission’s proposal. This signals a lack of appetite for seeking remedies for communities whose rights have been violated by infringements of the regulation, the organisation suggested.

“In recent months, calls have intensified from Indigenous Peoples and others on the frontlines of deforestation around the world, for the EU's proposed anti-deforestation regulation to require businesses to abide by international human rights laws and standards. Today Member States have partly heeded these calls.

“In order to ensure that the highest level of human rights protection applies, we call on the European Parliament to make it absolutely clear that international law and standards on community tenure rights must be respected and principles of Free Prior and Informed Consent are applied before goods can be sold on the EU market,”​ noted Polsterer.

An effective law must not offer loopholes: WWF

The critique from environmentalists at the WWF was more scathing still, insisting that changes pushed through by Environment Ministers will essentially undermine the efficacy of the legislation.

“The Council negotiating position has as many holes as a swiss cheese but unfortunately it does not taste that good. An effective law must not offer loopholes for companies to circumvent it, it must look beyond forests to include other threatened nature, and it must address the degradation of all forests, not just a specific type. Only then would it support real change on the ground,"​ said Anke Schulmeister–Oldenhove, Senior Forest Policy Officer at WWF’s European Policy Office.

The original proposal included ‘strong measures’ like a minimum number of checks and fines that must be proportional to the environmental damage caused and it envisioned a clearer framework for Member States on ways to carry out checks and controls, WWF said. While there were weaknesses in the Commission’s vision - such as other ecosystems missing from the scope of the legislation - the new law was on the ‘right track’ to ‘making a real change’, the environmental campaign group suggested.

But this eventuality could be receding.

WWF took particular issue with the definition of what constitutes ‘forest degradation’, describing the Council's take as ‘hindering more than helping’. Environmentalists said that focusing on the conversion of primary forests into plantations fails to address the wide variety of ways forests are destroyed, leading to biodiversity loss and exasperating climate change.

The suggestion that companies sourcing from countries classified as ‘low risk’ will not be required to complete a risk assessment offers a 'loophole', while the ‘massive reduction of controls’ - from 5% to 1% for products coming from ‘normal/standard’ risk areas and from 15% to 5% for products coming from regions at ‘high risk’ of deforestation - will ‘open the door wide' for products linked to deforestation to enter the EU market. Meanwhile, the regulation fails to recognise and other threatened ecosystems beyond forests were overlooked, in a move that risks shifting land-use change from forests to other areas, such as savannahs and peatlands, WWF warned. 

"With this position, national governments are hollowing out the EU deforestation law, leaving numerous loopholes. This goes against the calls of 1.2 million citizens, industry and scientists for a law to keep nature destruction off the EU market. It also undermines the EU's commitment to halt deforestation, and betrays nature and people affected by this destruction every day,"​ Schulmeister–Oldenhove insisted.

Fern’s Polsterer agreed that these changes risk undermining the scope of the regulation. “Simplified due diligence opens the way for goods produced on illegally deforested land, or which are the result of human rights violations, to be laundered through low-risk regions. For this regulation to succeed, strict requirements should be the norm, and no exemptions should be granted,​” Polsterer concluded.

Food sector concerns over workability remain

While NGOs were left enraged by the Council's stance on one hand, on the other, food sector organisations warned that the changes didn’t go far enough to address their concerns over chain of custody and traceability concerns.

In a joint statement, EU grain, oilseed and feed trade bodies - COCERAL, FEDIOL, and FEFAC – broadly welcomed the amendments but said they remain concerned that no significant changes were put forward on traceability, cooperation with third countries, and chain of custody. For instance, they argued that requiring the separation of flows of verified and non-verified deforestation-free products will make the mass balance approach unworkable, disrupting and distorting trade as well as undermining efforts already taken to halt deforestation in high-risk areas.

“It would require building new infrastructure - country elevators, silos, crushing lines or plants, port loading - at such prohibitive costs that operators in most large ports are likely to abstain from the investment. As a result, supply flows into the EU are expected to be considerably reduced and to switch from high risk to low risk areas, abandoning all positive engagement and incentives to farmers to halt deforestation.”

Meanwhile, the industry organisations argued, traceability requirements present a significant logistical challenge and threaten to squeeze smallholders out of supply chains rather than placing them on a path to deforestation-free production and forest protection.

“If such challenges are not solved under a multi-stakeholder approach involving local governments, local industry actors, EU operators, the EC, and NGOs, companies will not be able to collect reliable geolocation to plot information for the majority of smallholders currently part of their supply chains.

“To support rapid implementation and provide equivalent assurances, we call for traceability to production area, to be checked by satellite monitoring and checks on the ground as part of an operator’s due diligence.”

As the regulation continues to progress through European institutions, the European Parliament is set to vote on its opinion in mid-September. The Parliament and the Council will then need to negotiate their common position, during trilogue discussions with the European Commission.