Environmental organisations critical of proposed Forests Regulation of the European Commission
On 17 September 2021, the European Commission proposed a regulation to address deforestation: the Commission’s proposal concerning the making available on the EU market and the export from the EU of certain goods and products related to deforestation and forest degradation and repealing Regulation 995/2010. Hereinafter this proposal will be referred to as the Forest Regulation. Tackling deforestation is part of the objective of the European Green Deal European Green Deal – a set of measures to combat climate change and environmental degradation – and complements the legislative initiative on sustainable corporate governance. The power to act in the area of deforestation and forest degradation stems from the environmental articles of the Treaty on the Functioning of the European Union (TFEU) (Art. 191.1 in conjunction with 192 TFEU).
Forests provide a variety of environmental, economic and social benefits (Recital 1 preamble of the Forest Regulation). However, deforestation and forest degradation occur at a rapid pace (Recital 2 preamble). In the last 30 years the world has lost an area of forest greater than the European Union. The European Union continues to be one of the top importers of goods from areas associated with the destruction of forests and other natural areas. Together, EU Member States contribute as much as one third of global imports of goods associated with deforestation. This is alarming, because deforestation is the second largest source of greenhouse gas emissions. Protecting and restoring forests are therefore essential in the fight against climate change (Recital 3-4 in the preamble).
Deforestation is the (permanent) conversion of forest into agricultural land (Article 2(1) of the Forestry Regulation). The main cause of deforestation is said to be the expansion of farmland for the production of products such as beef, timber, palm oil, soya, cocoa and coffee. These six commodities account for the largest share of EU deforestation (Recital 27 preamble). The legislative proposal therefore establishes new standards for the marketing, making available on the Union market and export from the Union market of these six commodities. The expectation is that this will help to minimise deforestation and increase demand for deforestation-free products and commodities. Other goods are thus excluded from the scope of this bill (Art. 1 Forest Regulation). Derived goods such as chocolate, leather and furniture are covered. Companies trading in the relevant goods must demonstrate that the goods have not been produced on land that was deforested after 31 December 2020 (Art. 2 under 8 Forest Regulation). Art. 3 of the Forest Regulation is the cornerstone of the Regulation and contains a prohibition, which stipulates that the following 3 conditions have to be met for the marketing, offering on the Union market or exporting from the Union market of the goods mentioned in Art. 1:
- They are deforestation free;
- They have been produced in accordance with the applicable legislation of the producing country; and
- They shall be covered by a due diligence statement as referred to in Article 4(2).
In order to benefit from a due diligence certificate, operators shall fulfil the due diligence requirements set out in Article 8 of the Forest Regulation and subsequently make the due diligence certificate available to the competent authorities through the information system referred to in Article 31 of the Regulation (Articles 13-14 of the Forest Regulation) prior to the placing on the Union market or the export of the goods concerned. On the basis of Article 27 of the Forest Regulation, a benchmarking system will be used to assess countries with respect to the risk of deforestation and forest degradation posed by goods associated with deforestation. The worse the reputation of a countryd, the stricter the requirements for companies to show exactly where their products come from.
If operators do not comply with the requirements of the Forest Regulation, Article 23 sets out the following possible sanctions: fines (up to 4% of annual turnover), confiscation of the goods concerned, confiscation of income, suspension or prohibition of relevant economic activities and temporary exclusion from public tenders.
With this legislative proposal, the European Commission has listened to the 1.2 million Europeans who, through a public consultation the seriousness of deforestation. This legislative proposal is also seen by environmental organisations as a step in the right direction. The existing legislative framework of the European U legislative framework only partially addresses deforestation. For example, while the FLEGT Action Plan addresses illegal logging and associated trade, it does not address deforestation per se, but in this deforestation as such nIt does not address deforestation as such (recital 23 of the preamble). Environmental organisations are particularly pleased, because the relevant goods from Art. 1 Forest Regulation entering or leaving the European market must be genuinely sustainable, and not merely legal according to the standards of the producing country.
However, many environmental organisations are also critical of the bill, which they regard as incomplete. The criticism focuses mainly on four points:
- Many raw materials and products that endanger forests and ecosystems fall outside the scope of this law. The current bill because only six products. Products such as rubber, corn, chicken and pork are not included, even though they destroy nature. Dhe possibility exists to include more goods in the scope. Environmental organisations fail to understand why the European Commission has not already made use of this possibility with its this Environmental organisations cannot understand why the European Commission has not already made use of this possibility in its legislative proposal.
- Important nature areas such as savannahs, swamps and peat lands are excluded from the scope of this regulation. Environmental organisations welcome the anti-deforestation rules, but do not understand why aforementioned other important ecosystems are excluded from the scope of the Forest Regulation. They point to the destruction of these ecosystems for our products, threatening many animal and plant species. The European Commission recognises that the protection of forests should not lead to the conversion or degradation of other natural ecosystems, but will not decide on the need to include other ecosystems until two years after the entry into force of this proposed legislation.
- According to environmental organisations, the proposed legislation does not sufficiently guarantee the human rights and rights of indigenous peoples. The regulation does not require companies to monitor compliance with international human rights, while indigenous peoples are regularly driven off their land in the production of palm oil, for example. Environmental organisations want these rights to be enshrined in the proposed legislation. The European Commission only intends to pay attention to this issue at the latest five years after the entry into force (Art. 32.2 Forest Regulation).
- Financial institutionsand that invest in companies associated with deforestation are not listed as such in the proposed legislation. Environmental organisations would like to see this.
Because of the criticisms discussed above, environmental organisations hope that the draft law will not be approved by the European Council and the European Parliament, but will be amended in such a way as to broaden its scope and protect human rights. Parliament, but is amended in such a way that the scope is broadened and human rights are anchored in protection enshrined in it.
Once the bill is passed, it may affect your business if you can be considered a relevant economic operator. If you have any questions about obligations arising from the Forestry Ordinance, the lawyers at Law and More are here to help.