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To fight climate change and biodiversity loss, the new law obliges companies to ensure that a series of products sold in the EU do not come from deforested land anywhere in the world.

On Tuesday morning, MEPs reached a preliminary deal with EU governments on a new law on deforestation-free products that will make it obligatory for companies to verify and issue a so-called “due diligence” statement that goods placed on the EU market have not led to deforestation and forest degradation anywhere in the world after 31 December 2020. According to the agreed text, while no country or commodity as such will be banned, companies will not be allowed to sell their products in the EU without this type of statement. As requested by MEPs, companies will also have to verify compliance with relevant legislation of the country of production including on human rights and that the rights of concerned indigenous people have been respected.

The new law would guarantee European consumers that the products they buy do not contribute to the destruction and degradation of forests, including of irreplaceable primary forests, and would hence reduce the EU’s contribution to climate change and biodiversity loss globally.

Scope

The products covered by the new legislation are: cattle, cocoa, coffee, palm-oil, soya and wood, including products that contain, have been fed with or have been made using these commodities (such as leather, chocolate and furniture), as in the original Commission proposal. During the talks, MEPs successfully added rubber, charcoal, printed paper products and a number of palm oil derivatives. Parliament also secured a wider definition of forest degradation that includes the conversion of primary forests or naturally regenerating forests into plantation forests or into other wooded land and the conversion of primary forests into planted forests.

The Commission shall evaluate no later than one year after the entry into force, whether to extend the scope to other wooded land. No later than two years after the entry into force, the Commission shall also evaluate an extension of the scope to other ecosystems, including land with high carbon stocks and with a high biodiversity value, as well as to other commodities. At the same time the Commission shall also assess the need to oblige EU financial institutions to only provide financial services to their customers if they assess that there is only a negligible risk that these services do not lead to deforestation.

Risk-based controls

The competent EU authorities will have access to relevant information provided by the companies, such as geolocation coordinates, and conduct checks. They can, for example, use satellite monitoring tools and DNA analysis to check where products come from.

The Commission will classify countries, or part thereof, into low, standard or high risk within 18 months of this regulation entering into force and the proportion of checks on operators will be performed according to the country’s risk level: 9% for high risk, 3% for standard risk and 1% for low risk. For high risk countries, member states would also have to check 9% of total volumes.

Penalties for non-compliance shall be proportionate and dissuasive and the maximum amount of a fine is set at least 4% of the total annual turnover in the EU of the non-compliant operator or trader.

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