Deforestation is a considerable issue in terms of carbon emissions and the climate crisis. On the most basic level humanity is killing the very thing that gives us life – oxygen-producing trees. However, the overall effects of deforestation are even further reaching than many of us can imagine.

When it comes to climate change, cutting down trees both releases carbon dioxide to the air and takes away the possibility of trees absorbing carbon dioxide already present in the atmosphere. (1) Between 2015 and 2017, deforestation caused about 4.8 billion tonnes of carbon dioxide per year.

This equals 8-10% of annual human emissions of CO2. (8)

Shockingly, if tropical deforestation were a country, it would rank third in carbon dioxide-equivalent emissions, behind China and the U.S. (2) Closer to home, an area larger than the EU, or 420 million hectares of forest, has disappeared due to deforestation in the past three decades (1990 – 2020) according to the UN Food and Agriculture Organization (FAO). The EU caused approximately a tenth of said deforestation. (5)

You might be wondering: How on earth did we get here?

There are many different issues contributing to deforestation:
More than half of deforestation is caused by just four factors; farming, grazing of livestock, mining, and drilling. (1) Deforestation caused by forestry, fires and shifting agriculture is usually a temporary problem, as long as forests are given enough time to regenerate. However, forest conversion for mining, oil and gas production, industrial agriculture, and urbanization is mostly permanent. (3)

In order to have enough raw material for the production of wood and paper products, vast numbers of trees are still being felled by loggers on a daily basis. In addition, these loggers often illegally build roads to access the most remote forests, causing additional deforestation. (1)

What does the new EU law entail?

In response to these damaging practices, the EU has decided to introduce this new deforestation law to fight the climate crisis and biodiversity loss. Its aim is to ensure any products sold in the EU do not originate from deforested land anywhere in the world. (4)
Executive Vice-President for the European Green Deal Frans Timmermans said in a statement: “To succeed in the global fight against the climate and biodiversity crises we must take the responsibility to act at home as well as abroad. Our deforestation regulation answers citizens' calls to minimise the European contribution to deforestation and promote sustainable consumption. ”  (6)

Hélène Saurais, Co-founder at inoqo, wholeheartedly agrees with Timmerman. “This new law is reflective of the overall business climate and an encouraging move towards making production processes more sustainable. Addressing the climate crisis through laws such as this is essential if we want to have any chance of remaining under the threshold set out in the Paris Agreement,” she said.

The onus of verifying where their products’ ingredients originate from lies on the F&B brands. They will soon need to issue a so-called “due diligence” statement that products being sold in the EU market have not led to deforestation and forest degradation anywhere in the world.
Mariana Pedro, sustainability expert at inoqo, feels making companies change their ways is essential for progress.

“An important step to promote system change in the food sector industry is by creating structural policies like this law,” says Mariana. “Consumers should not be the ones to research and understand what a deforestation-free product is and should be protected from "greenwashing" claims from food brands.”

This is where inoqo’s product impact assessment comes in handy. We can assist you in identifying compliance breaches along your entire value chain, so you can optimise your products to adhere to this new EU law.

Challenges facing the implementation of the new EU deforestation law

Doris Wimmer, Co-founder of inoqo, points out that there may be challenges along the way, especially when it comes to implementation. “In my opinion, the main challenge of this law will be its enforcement. We have seen in our work so far, how poorly documented current supply chains are and how challenging supply chain auditing seems to be. I am therefore really curious about how auditing for this new law will work and how the consistency of the data will be checked. What I hope for, is that this law will support the emergence of new technologies and strategies, on how to credibly trace supply chains - and that this will have a spill-over effect also onto other commodities.”

So far, the EU has stated that non-complying products or companies will not be banned. However, they will not be allowed to sell their products in the EU without issuing the aforementioned statement. Furthermore, they will face penalties for non-compliance. The amount of fines will equal at least 4% of the non-compliant company’s total annual turnover.

Furthermore, food producers will have to verify compliance with the relevant legislation of the country of production. Aside from deforestation, this also applies to human rights and respecting the rights of concerned indigenous peoples. (4)

What food products does the new EU deforestation law cover?

A fairly broad range of products will be affected by this new law. The food products that will fall under the new law are:

This initial list of food items is hardly surprising considering beef, soya and palm oil alone are responsible for 80% of tropical deforestation. Within the EU, palm oil and soya are the biggest deforestation culprits. (7)

Also, when trying to meet the EU’s new standards, companies need to be aware that the ban applies to any products that contain, have been fed with or have been made using the above products commodities (such as leather or chocolate). (4)

How will the EU authorities know which products to approve?

The relevant EU authorities will be granted access to a company’s production process information, including geolocation coordinates, and conduct checks. The authorities will also be able to conduct their own checks via satellite monitoring and DNA analysis to confirm where products are sourced from.

What are the next steps after the introduction of the deforestation law?
First of all, Parliament and Council will have to formally approve the agreement. The new law will come into force 20 days after its publication in the EU Official Journal. However, some articles will not apply until 18 months later.

Within the following 18 months after the new law has been introduced, countries will be divided into low, standard or high risk. This affects the scale of checks conducted on operators: 9% for high risk, 3% for standard risk and 1% for low risk.

One year after the law has entered into force, the Commission will decide whether to extend the scope to other wooded lands. After two years, the Commission will debate whether to introduce an extension of the scope to other ecosystems, including land with high carbon stocks and with a high biodiversity value, as well as to other commodities. At the same time, they will discuss whether EU financial institutions should only be allowed to provide financial services to their customers when there is no high risk that these services might lead to deforestation. (4)

Commissioner for the Environment, Oceans and Fisheries Virginijus Sinkevičius explained that this law is a major step by the EU to recognise its contribution to the climate crisis: “If we expect more ambitious climate and environmental policies from partners, we should stop exporting pollution and supporting deforestation ourselves. The deforestation […] regulations we are putting on the table are the most ambitious legislative attempts to tackle these issues worldwide ever. With these proposals, we are taking our responsibility and walking the talk by lowering our global impact on pollution and biodiversity loss.”  (6)

Let us help you eliminate Deforestation from your Production Processes

We are certainly facing an interesting time with big changes on the horizon. There is already an indication that the situation can and will get better. The rate of deforestation declined between 2015 and 202 to total 10 million hectares. This is down from 12 million hectares in the period between 2010 and 2015. With this new law, large strides will certainly be made to completely eliminate deforestation from the EU’s production cycles in the near future. Then there is of course the hope, that if the EU countries succeed other countries will follow suit. (9)

Businesses like yours need to prepare themselves for a massive overhaul of the company’s production processes. The first step to complying is an impact assessment of your product range. Once we identify the impact hotspots (the areas in your value chain that are contributing to deforestation), we can work together to eliminate these practices to be compliant with the law. If you would like to learn more about how we can assist you in these times of big change, simply send us an email at hello@inoqo.com.