EU Parliament adopts new law to combat global deforestation

Between 1990 and 2020, forest areas larger than the area of the EU were deforested. In the future, companies must ensure that forests have neither been cut down nor damaged for products sold in the EU.

To counteract climate change and species loss, forests are to be better protected in the future. This is what MEPs have decided by adopting a corresponding regulation. This is because a total of 420 million hectares of forest were converted to agricultural land between 1990 and 2020 alone, according to estimates by the Food and Agriculture Organization of the United Nations (FAO). This corresponds to an area larger than the entire EU. Consumption in the EU is responsible for about 10% of this global deforestation. Palm oil and soy account for more than two-thirds of this.

Companies must submit a due diligence declaration

In the future, companies will therefore have to ensure that forests have not been cut down or damaged for products sold in the EU. Imports from certain countries, or imports of certain raw materials, will not be banned. However, companies will only be allowed to sell products in the EU if the relevant suppliers have submitted a so-called due diligence declaration.

The declaration confirms that the product in question does not originate from an area that has been deforested after December 31, 2020, nor has it led to the degradation of forests - and in particular irreplaceable primary forests - after December 31, 2020. Companies must also demonstrate, as required by the European Parliament, that these products comply with the relevant legislation of the country of production. This means that human rights and the rights of the indigenous peoples concerned must be respected.

New regulations apply to soybeans, wood, palm oil and other natural products

Covered by the new legislation - as stipulated in the Commission's original proposal - are cattle, cocoa, coffee, palm oil, soy and wood, including products containing, fed on or made from these raw materials, such as leather, chocolate and furniture. During the negotiations, MEPs also succeeded in extending the rules to rubber, charcoal, printed matter, and some palm oil derivatives.

Forest degradation is defined comprehensively

The European Parliament also provided a more comprehensice definition of forest degradation. It now includes the conversion of primary forests or naturally regenerating forests into plantation forests or into other forested areas, as well as the conversion of primary forests into forests created by plantation.

The greater the risk, the more controls there are

Within 18 months of the Regulation coming into force, the European Commission will classify countries or parts of countries as low, normal or high risk based on an objective and transparent assessment.. A simplified due diligence process applies to products from low-risk countries. The level of scrutiny applied to operators is based on the risk level of each country: 9% for high-risk countries, 3% for normal risk countries and 1% for low-risk countries.

Deterrent measures to prevent circumvention

The relevant EU authorities have access to information provided by the companies, such as geographical coordinates, and use satellite monitoring tools and DNA analysis to verify where the products come from.

Penalties for violations must be proportionate and dissuasive, and the maximum fine must be at least 4% of the violating company's or trader's total annual turnover in the EU.

The road to entry into force

The EU treaties state that the Parliament can ask the Commission to propose legislation. In October 2020, it did so with a view to protecting forests, calling for rules to halt global deforestation caused by the EU. On December 6, 2022, the Parliament agreed with EU member states on the new rules. The new rules were adopted by 552 votes to 44 with 43 abstentions.

The text must now also be formally approved by the Council. It will then be published in the Official Journal of the EU and enter into force 20 days later.