European Parliament Votes for a new Deforestation Law
As anticipated, on September 13, the European Parliament adopted its negotiating position on the European Union’s (EU) Deforestation Regulation to help protect the world’s forests. The draft law, initially put forward by the European Commission (EC), will require companies to ensure that the products they sell in Europe are not driving deforestation or human rights abuses. The votes were 453 votes in favor, 57 against and 123 abstentions.
In summary, the key takeaways from the Parliament’s position are as follows:
The initial EC proposal included beef, wood, palm oil, soya, coffee, and cocoa and by-products. The Parliament extended the scope to include pigs, sheep, goats, poultry, rubber, maize, charcoal, and wooden musical instruments. Further extension will be considered one year after the entry into force of the Regulation.
Parliament also pushed to broaden the definition of forest degradation to include not only forests but also “other wooded land” that has been converted for agriculture and commodity production.
Regarding obligations, companies will be obliged to specify the geolocation of the exact plots of land where commodities were produced. In addition, it is proposed to include human rights safeguards under the new obligations. Companies sourcing from areas with low deforestation risk will have simplified due diligence obligations but will be required to conduct risk assessments. Parliament also proposed engagement with small farmers and stakeholders involved in the supply of the products targeted.
Parliament has approved that financial institutions should be covered by the regulation. They proposed a set of obligations by which all banking, investment, and insurance activities of financial institutions should be under strict due diligence obligations to prevent them from supporting projects directly or indirectly linked to deforestation, forest degradation or forest conversion. Financial Institutions shall also collect, verify, and analyze information and relevant documentation – previously requested to their customers – to carry out a risk assessment on the customer’s activity. If the financial institutions cannot conclude that the risk of non-compliance is negligible, they shall not provide financial services to the concerned customers.
Members of the European Parliament back the EC’s proposal of implementing the new rules 12 months after the entry into force of the Regulation.
Since the EC and the Parliament have adopted their positions, the negotiations will start in order to come to an agreement.