A new chapter to stop the EU’s complicity in global deforestation is about to start

The deal is expected to set global standards for deforestation-free supply chains and raises hopes of a race to the top to push other consumer markets such as the US, China and the UK to follow suit. 

The EU is the second biggest importer of deforestation after China. In 2017, the EU was responsible for 16% of deforestation associated with international trade, totalling 203,000 hectares and 116 million tonnes of CO2 emissions.  

Global Witness has been at the forefront of the campaign for the EU to pass an ambitious anti-deforestation law, and while our wish-list has not been entirely fulfilled the law has the potential to improve the state of our world’s forests.    

What’s good in the text?

First and foremost, the EU managed to seal an agreement to prevent products linked to deforestation and forest degradation from being sold on the EU market based on both internationally backed definitions (FAO) and legality. This means that a targeted list of products must be deforestation-free (produced on land that was not subject to deforestation after 31 December 2020) and legal (compliant with all relevant applicable laws in force in the country of production).

This contrasts with new rules in the UK, which will only prevent products entering the market if coming from deforestation that is illegal in its source country.  After years of seeing precious rainforests being opened up for industrial agricultural production driven by global demand, the clarity that goods from deforested land will not be permitted in the EU whatever their legal status is very welcome.

Due diligence obligations will be in place for companies to comply with the law, alongside strict traceability requirements to prove where products are coming from. Importantly, the EU has also agreed to mechanisms to ensure proper enforcement of the rules, having learned from experience with the EU Timber Regulation.

The full range of forest-risk commodities that will be covered by the rules are cattle, cocoa, coffee, palm oil, soy, rubber and wood, as well as related products including charcoal, printed paper, palm oil derivates, preserved meat, leather, chocolate and furniture. 

Rubber had been excluded in the Commission’s original draft law after lobbying efforts by the tyre industry – which we exposed in our investigation Rubbed Out. We revealed how industrial rubber plantations in West and Central Africa have been linked to deforestation 16 times the size of Brussels since 2000, making it as the leading European driver of deforestation in the region, so we are delighted to see rubber eventually included in the law following pressure from the European Parliament.

And the law should get progressively stronger. Within one year, the law should also be expanded to other wooded land – which would include parts of the Cerrado savanna in Brazil. Furthermore, within two years after its entry into force, the European Commission will consider whether to expand the law to other goods such as maize, biodiesel and other livestock products, as well as to cover other ecosystems than forests, such as peatlands or wetlands.

An opening to regulate the financial sector

The deal represents an important step towards ending the EU financial sector’s complicity in deforestation.   

In recent years, our investigations have found that household-name banks based in the EU were contributing to the clearing of vast swaths of tropical forests.  

Crunching the numbers, we revealed that right after the Paris Agreement until 2020, EU-based banks provided €30.6 billion worth of deals to 20 agribusinesses accused of deforestation. Analysing more than 70,000 deals, we estimated those EU-based banks had made approximately €401 million in profits. This stark reality clearly showed that voluntary commitments by financial institutions are not enough and that stringent rules are needed. 

We were therefore delighted when the European Parliament voted in September to include the financial sector in the legislation – supported by repeated civil society calls, private sector positions, and recent statements from progressive financial institutions. Whilst the Parliament didn’t quite get what they and we wanted, the vote meant that the financial sector was not entirely let off the hook in the final round of negotiations.  

The EU is now bound to assess the role of banks and investors in deforestation and ultimately propose regulatory measures within two years of the law entering into force.  

This is a baby step but a crucial one, which sends signals to the financial sector that time has come to put an end to harmful investments and be part of the EU’s efforts to halt global deforestation.   

Bitter taste

Despite consistent pressure from civil society and indigenous communities, EU governments failed to support internationally recognised protections for Indigenous Peoples.  

Internationally-recognised standards are important, as while indigenous Peoples and other customary rights-holders are estimated to hold as much as 65% of the world’s land area [1] through customary, community-based tenure systems, national laws only recognise 10% of land as belonging to them, with another 8% designated for their use. Our recent annual report into the killings of land and environmental defenders reports 200 killings in 2021, with over 40% of all fatal attacks targeting Indigenous Peoples. 

The final agreement doesn’t go beyond requiring compliance with national laws to adequately respect land rights and the Free, Prior and Informed Consent (FPIC) of communities living in forests. However, without the pressure that indigenous and civil society groups put on the European Parliament, there wouldn’t be a reference to FPIC at all in the law. 

For those of us who have been campaigning hard to get this law agreed in the most robust, ambitious, and effective way, it really felt like climbing a giant mountain. Advocating for policy changes in the EU comes with moments of triumph and frustration – and one is never satisfied with the results. 

However, I’m proud of what we have done to strengthen the law and put deforestation finance firmly on the EU agenda. The role of global civil society and the Together4Forests movement has been absolutely vital in keeping up the pressure on European policymakers. Together we helped ensure 1.2 million people participated in the Commission’s public consultation on the law and over 200,000 European citizens engaged with their governments.

A new chapter has just started, and we’ll be continuing to work to monitor the implementation of the law and get the EU financial sector to finally end its complicity in global deforestation.

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Notes:

[1] Up to 2.5 billion men, women and children, including more than 370 million Indigenous Peoples, rely on land, natural resources and ecosystems – forests, rangeland and wetlands – that are held, used or managed collectively. About one in three people are dependent on communal land for their wellbeing and livelihood. See Oxfam, International Land Coalition, Rights and Resources Initiative and Land Rights Now (2016) Common Ground: Securing landrights and safeguarding the earth ; United Nations Permanent Forum on Indigenous Issues Factsheet ; Liz Alden Wily (2011) The tragedy of publiclands: the fate of commons under global commercial pressure.