15th Aug 2022

MEPs tighten deforestation rules, covering banks

  • The EU is responsible for around 10 percent of global deforestation through the import of products such as soya, beef, palm oil and cocoa (Photo: CodiePie)
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MEPs in the environment committee reached an agreement on Tuesday (12 July) over how to reduce the global deforestation driven by European consumption of certain commodities — pushing for more ambition in a key EU climate law.

The report, adopted by the majority of lawmakers, supports a wider scope and stricter rules to verify that only deforestation-free products are allowed in the EU market, including increased fines and penalties for those companies found in breach of their obligations.

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Beyond cattle, cocoa, coffee, palm oil, soya and wood, MEPs have included pigmeat, sheep and goats, poultry, maize and rubber, as well as charcoal and printed paper products under the scope of the legislation.

Likewise, they also call on the commission to evaluate including other commodities — such as sugar cane, ethanol and other mining products — no later than two years after the rules start applying.

Companies selling these products on the EU market will be required to carry out due diligence exercises, evaluate risks in their supply chain and collect geographic coordinates of the area where the commodities are produced to allow traceability via satellite images.

But imports from "low-risk" countries will be subjected to simplified procedures.

EU lawmakers said the assessment of countries into "low", "standard" or "high" risk should be made by the commission six months after the new rules enter into force and in a "transparent" manner.

MEPs also said that the use of geolocation data and satellite imagery will help authorities in national capitals ensure that no products are allowed to enter the EU market if they are produced in land subject to deforestation or forest degradation after 31 December 2019 — bringing the cut-off date defining a "deforestation-free" commodity one year forward from the original commission proposal.

Yet, the parliament defended a more ambitious cut-off date in its 2020 own-initiative report, where they argue that "the cut-off date must be set in the past, but no later than 2015".

MEPs say the law should apply to forests and "other wooded land". But they also managed to include a provision to potentially cover other ecosystems such as grasslands, peatlands and wetlands — after an impact assessment is carried out by the commission within one year after the rules enter into force.

In their report, EU lawmakers also say rules should also apply to the financial sector as banks and investors have proven to be also drivers of imported deforestation.

420 million hectares in 30 years

The world has lost around 420 million hectares of forest since 1990, mainly in Africa and South America, due to the expansion of agriculture activities dedicated to products such as soy, palm oil and cocoa.

And the EU is among the world's largest importers of tropical deforestation, being responsible for about 10 percent of it associated with international trade.

But this new law is considered a potential game-changer in halting both legal and illegal deforestation in producing countries.

"Final plenary vote in September on this world first!," liberal MEP Pascal Canfin tweeted, shortly after the vote results were announced.

For his part, Luxembourgish centre-right MEP Christophe Hansen, the lead lawmaker in this file, said "this new tool has the potential to pave the way to deforestation-free supply chains".

The report will be subjected to a plenary vote after the summer break If adopted, this will become the parliament's position to enter into negotiations with EU member states.

EU banks play 'major role' in deforestation, report finds

Banks based in the EU have earned a reported €401m from deforestation, out of more than €30bn worth of deals with companies linked to logging. Deal-making was dominated by big banks from the Netherlands, France, Spain, Germany, and Italy.


Amazon deforestation and the EU-Mercosur trade deal

Regrettably, it seems that the EU has turned a blind eye to deforestation in the Amazon. So much so that over 400 NGOs are pushing 'Stop EU-Mercosur', to derail the free trade agreement with South America.

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Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.

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Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.

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