Tuesday

27th Feb 2024

Africa scrambles to comply with new EU due diligence rules

  • A girl grinds coffee beans during a traditional Ethiopian coffee ceremony. The EU's new supply chain due diligence rules pose a major compliance problem for African agriculture, not least Ethiopia's coffee exports (Photo: Taylor Flowe)
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The EU's new due diligence laws designed to address deforestation and human rights abuses in supply chains risk having an uneven effect on African economies and farming, as governments and industry scramble to prepare compliance regimes.

The EU's corporate sustainability due diligence directive (CSDDD), agreement on which was finalised by EU ministers and the European Parliament in December, aims to ensure that businesses identify, prevent, and mitigate their adverse impacts on human rights and the environment across their supply chains. That includes guaranteeing that products do not contribute to deforestation.

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The new regime is one of several pieces of EU law aimed at imposing due diligence requirements to tackle environmental degradation and human rights abuses, and will first apply to multinational companies in late 2024. Firms will be required to screen their global suppliers via the setup of annual due diligence frameworks. These would need to be provided to the member states where the products are sold.

The directive on deforestation-free products applies to cattle, cocoa, coffee, palm oil, rubber, soya, and wood. It also covers products like leather, chocolate, charcoal and printed paper, which have been made using these commodities.

Ghana will begin issuing Forest Law Enforcement Governance and Trade (FLEGT) licence for exports to the EU this year.

The new licence scheme was revealed earlier this week by chief executive of Ghana's Forestry Commission, John Allotey. The move is part of the Accra government's attempts to comply with new EU due diligence rules on deforestation that will come into force later this year.

In December, Ghana introduced the Ghana Cocoa Traceability Systems (GCTS) — a platform designed to trace every tonne of cocoa sold from the farmer to consumer.

The due diligence statements should also include information attesting that products produced by suppliers have complied with supplying countries' land-use, labour and human rights laws.

Officials in Ivory Coast and Ghana, which together account for about 65 percent of the world's cocoa production, say that they view the new EU regime as an opportunity. They are also lobbying the EU for increased financial support to address deforestation.

Last year, Ivory Coast introduced its own GPS tracking system to improve data on where cocoa beans originate and has been distributing electronic tracking cards to farmers since February.

The cocoa industry and the two main African producers have worked with the EU for many years, leaving the sector better placed to comply with the new EU laws.

'Cocoa OPEC'?

In 2019, Ivory Coast and Ghana threatened to create a 'cocoa OPEC' by suspending the sale of cocoa beans to the open market for the 2020-21 crop season in a bid to secure higher prices for their farmers.

That triggered discussions with EU officials which led, in 2022, to the EU Commission, Ivory Coast, Ghana and the cocoa sector to form an 'Alliance on Sustainable Cocoa' under which the EU executive would pay €25m to enhance the sustainability of cocoa production.

During negotiations on the new due diligence directive, MEPs demanded a guarantee of minimum prices for producers in the latest agreement between the EU, Ghana, Ivory Coast and the cocoa industry. This demand was left out of the final text which only includes a reference to living wages for cocoa industry workers.

The EUDR was passed by the European Parliament with cross-party support and a 552 to 44 majority.

"We don't want to be complicit anymore in this global deforestation happening a little bit in Europe but first and foremost in other parts of the world," said Christophe Hansen, a Luxembourgish MEP from the centre-right European People's Party (EPP), who was the parliament's lead negotiator on the regulation.

However, other countries and sectors are less sanguine about the implications of the new directive.

Coffee industry representatives have pointed to a recent drop in orders for coffee from Ethiopia, the sale of which currently generates 30-35 percent of Ethiopia's total export earnings, with almost a quarter sold to the EU.

One effect of the directive, they say, could be that multinationals reduce their purchases from smallholder farmers — of which there are five million producing coffee in Ethiopia — and increase supplies from large commercial farms for whom due diligence compliance will be less onerous.

The directive will require the EU to offer provide technical and financial assistance to countries demonstrating willingness to combat deforestation and 'least developed countries,' though there is little clarity on what this will look like in praactice.

On 3 January, the Ethiopian government formally launched a $20.8m [€19.15m] project with the UN development programme to tackle deforestation, promote forest restoration, and integrate sustainability into the country's coffee value chains.

Analysis

Final steps for EU's due diligence on supply chains law

Final negotiations on the EU due diligence law begin this week. But will this law make companies embed due diligence requirements in their internal processes or incentive them to outsource their obligations to third parties?

Opinion

EU corporate due diligence: new rules, or businesses rule?

The Brussels rumour mill has it that the EU Commission is being pressured to put forward a weaker proposal than what civil society organisations, trade unions, and the European Economic and Social Committee say is needed.

Opinion

How industry watered-down new EU supply chain rules

The Commission fell hook, line, and sinker for the arguments of big business on the corporate due diligence directive — conflating rules and regulations with so-called 'red tape' and rebranding regulations as 'burdens' on business which should be scrapped.

Analysis

Hits and misses of EU supply-chain due-diligence law

The EU has reached an agreement on the due diligence directive, making large EU and non-EU companies accountable for their negative impacts on human rights and the environment — but with an exemption and some gaps at its core.

Opinion

The elephant in the room at this weekend's African Union summit

Italy's offer to mobilise €5.5bn over the next years, overwhelmingly in already-allocated loans and guarantees, pales in comparison to the financing challenges faced by Africa. Only an EU-wide coordinated financial offer can credibly respond to African needs.

Opinion

Germany throws a spanner in works of the EU supply chain law

Germany's pro-business coalition party the FDP now cites "unreasonable bureaucratic hurdles" in the EU's proposed supply chains directive, in a major and unexpected U-turn, writes the associate children's rights director at Human Rights Watch.

Opinion

The elephant in the room at this weekend's African Union summit

Italy's offer to mobilise €5.5bn over the next years, overwhelmingly in already-allocated loans and guarantees, pales in comparison to the financing challenges faced by Africa. Only an EU-wide coordinated financial offer can credibly respond to African needs.

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