New due diligence rules on commodities planned for EU

23 November 2021

Mandatory supply chain due diligence rules for companies trading in commodities linked to deforestation have been proposed by the European Commission (EC).

The new regulations would apply to companies wanting to place commodities on the EU market such as soy, beef, palm oil, wood, cocoa and coffee, as well as some of their derived products. The EC said it wanted to be able to guarantee that products bought in the EU did not contribute to deforestation and forest degradation, which is mainly caused by agricultural expansion linked to these commodities.

The EC said that 420m hectares of forest were lost between 1990 and 2020.

Under the new rules companies will have to confirm to national authorities that the products they place on the EU market follow the EU rules.

A digital system will give member state authorities access to information on the commodities and products, such as geographic coordinates and country of production. Anonymised data of this system will be available to the wider public in order to foster transparency.

Member state authorities will carry out inspections of products and report on enforcement activities to the EC. They will be able to suspend relevant commodities and products with non-negligible deforestation risks from being placed on the EU market.

A country benchmarking system conducted by the EC will determine the risk of deforestation.

Companies placing products on the EU market will have to collect information about commodities and products to ensure they have not been produced on land deforested or degraded after 31 December 2020. As part of due diligence they will be required to analyse and evaluate risks in their supply chain, and take mitigation measures such as using satellite monitoring tools, field audits, capacity building of suppliers or isotope testing to check the origin of products.

As part of its European Green Deal strategy the EC has also proposed new rules to facilitate intra-EU waste shipments. This is to promote the circular economy and tackle the export of illegal waste, the EC said.

Waste exports to non-OECD countries will be restricted and only allowed if third countries are willing to receive certain wastes and are able to manage them sustainably. Waste shipments to OECD countries will be monitored and can be suspended if they generate serious environmental problems in the country of destination.

Under the proposal, all EU companies that export waste outside the EU should ensure that the facilities receiving their waste are subject to an independent audit showing that they manage this waste in an environmentally-sound manner.

The EC has also presented a new soil strategy to have all European soils restored, resilient, and adequately protected by 2050.

Virginijus Sinkevičius, commissioner for the environment, oceans and fisheries, said: “If we expect more ambitious climate and environmental policies from partners, we should stop exporting pollution and supporting deforestation ourselves. The deforestation and waste shipment regulations we are putting on the table are the most ambitious legislative attempts to tackle these issues worldwide ever. With these proposals, we are taking our responsibility and walking the talk by lowering our global impact on pollution and biodiversity loss. We also put forward a ground-breaking EU soil strategy with a strong policy agenda that sets out to grant them the same level of protection as water, marine environment and air.”

The UK Environment Act, which received royal assent on 9 November, stipulates firms using forest commodities must carry out due diligence, and report on it, to show local laws around deforestation were not breached.

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