Up to 90% of deforestation is carried out illegally to make space for agricultural production © Joao Laet/AFP via Getty Images
Up to 90% of deforestation is carried out illegally to make space for agricultural production © Joao Laet/AFP via Getty Images

Firms face fines for deforestation in supply chains

25 August 2020

The UK government has proposed a “world-leading” new law to clamp down on illegal deforestation in supply chains.

The Department for Environment, Food and Rural Affairs (Defra) announced there would be a six-week long consultation on the new rules that would see businesses operating in the UK fined if they failed to carry out due diligence to ensure commodities were free from deforestation.

“We propose to introduce legislation that would make it illegal for businesses to use, either in production or trade within the UK, forest risk commodities that have not been produced in compliance with relevant laws of the country in which they are grown,” Defra said. 

Under the legislation, firms would be required to have a “robust system of due diligence in place” for the supply of key commodities such as cocoa, soy, rubber and palm oil and to report findings regularly. 

“Businesses that fail to comply would be subject to fines, with the precise level to be set at a later date,” Defra added.

Larger businesses above a turnover and employee number threshold would be in scope of the law. The precise thresholds and scale of the fines will be set in secondary legislation, Defra said. 

Defra said up to 80% of deforestation is caused by the production of agricultural commodities, while up to 90% of deforestation carried out in some countries is illegal. 

Lord Zac Goldsmith, international environment minister, said: “There is a hugely important connection between the products we buy and their wider environmental footprint, which is why the government is consulting today on new measures that would make it illegal for businesses in the UK to use commodities that are not grown in accordance with local laws.

“There has been a lot of progress already to make the UK’s supply chains more sustainable, but more needs to be done. We will continue to work closely with farmers, business and governments around the world to ensure that we can protect our vital forests and support livelihoods as we build back greener from coronavirus.”

The move comes in response to recommendations made by the Global Resource Initiative (GRI) earlier this year. The GRI called on the government to introduce a “legally-binding target to end deforestation” in supply chains by 2030

However, critics have argued that the government’s proposal is “seriously flawed”, shifting the problem onto other countries rather than truly addressing it. 

Elena Polisano, forests campaigner at Greenpeace UK, said: “Defra’s proposal to make it ‘illegal for larger businesses to use products unless they comply with local laws to protect natural areas’ is seriously flawed. We’ve all seen the way president Bolsonaro has championed the expansion of agriculture in Brazil at the expense of the Amazon rainforest. 

“There is also nothing to address the fact that some commodity producers may have one ‘sustainable’ line but continue to destroy forests elsewhere, which just shifts the problem into someone else’s backyard.”

Polisano added the problem of deforestation will never be solved without first tackling demand. Greenpeace has called on retailers such as Tesco to “reduce the amount of meat and dairy they sell and drop forest destroyers from their supply chain immediately”.

“Proactively, the UK government and UK industry need to support a just transition at home and in forest regions to food systems that work with nature, including the restoration of natural ecosystems,” she said. 

A spokesperson for consumer goods giant Unilever told SM it welcomed the “encouraging development” from the UK government “at such a critical time for forests”. 

Earlier this month, the firm announced plans to use geolocation data to help track the first mile of its palm oil supply chains to help identify deforestation risks.

Alex Saric, chief marketing officer at Ivalua, said: “UK businesses will no longer be able to simply track their direct impact on natural areas and claim they are sustainable. Instead, businesses will need to measure the environmental impact of the entire global supply chain, including tier one and sub-tier suppliers. 

“Currently this is rare, as recent figures have shown almost a third of UK businesses have no plans at all to address deforestation in the supply chain, with most others just in the planning phase. UK businesses need to move fast to improve supply chain visibility, or they risk falling foul of new regulations.”

Malcolm Harrison, CIPS group CEO, said: “Driven by demand from consumers and businesses who want more information about the origins of the goods and raw materials they buy, transparency and sustainability in supply chains increasingly offers a competitive advantage for organisations and should be at the forefront of procurement’s agenda as business imperatives. Legislation can only increase the focus for those that have less clarity and allow unethical practices from suppliers.

“Our own research this year found that 15% of the companies we surveyed during the pandemic were shelving their sustainability initiatives as other seemingly more pressing matters took precedence. However, sustainability in supply chains remains one of the most important issues in modern society today, and managers have the responsibility to ensure their teams and their businesses are doing the right thing regardless of other pressures.

“These initiatives should not be cast aside but should remain at the top of the list and this new regulation will bring us closer to fighting climate change and meeting sustainability objectives.”

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