We must combat deforestation globally and agree on realistically achievable EU rules

Finnish Industries support the aim to safeguard the world’s forests, protect biodiversity, and tackle global warming. However, we must ensure an ambitious and realistically achievable regulation, writes Karoliina Rasi, Senior Adviser at our Brussels office.

The European Parliament recently adopted its position on the deforestation regulation-proposal. The initiative aims to minimize consumption of products coming from supply chains associated with deforestation or forest degradation – and increase EU demand for and trade in legal and ‘deforestation free’ commodities and products. Finnish Industries support the aim to safeguard the world’s forests, protect biodiversity, and tackle global warming. We must ensure an ambitious and realistically achievable regulation, however.

The Parliament made several changes to the Commission’s original proposal, and its position significantly differs from the Member States’ position as well.

The product scope related to the obligation to prepare a due diligence statement (DDS) for all operators and traders who place, make available or export products from the EU market originally included beef, soy, palm oil, rubber, timber, cacao, and coffee. The Parliament enlarged the product scope to also include corn, rubber, poultry, soy, palm oil, cattle, and wood. While we must combat deforestation, we should first start with the originally suggested commodity list where an impact assessment has been carried out by the Commission.

The Parliament seems to oblige the trader to prepare a due diligence statement no matter how far on the supply chain they are. The first placer on the market should be responsible to ensure that the commodity or product is deforestation free, and prepare the due diligence statement, as they are closest to the original source of the commodities/products. It becomes challenging further along the supply chain. Any trader downstream should be able to rely on this statement and check the origin of the commodity via a chain of custody.

In the Member States’ position the operator-exporter or manufacturer who is the first placer on the market of the commodity or products rightly is responsible for the due diligence statement. And all other traders except SMEs are obliged to make available to the competent authorities the reference numbers of the existing due diligence statements via an information system. The traders would be obliged to make available the reference number without a request. As an exporter or manufacturer already must do that, we should indeed avoid duplicating work.

We welcome the Council’s simplified and clarified rules of the due diligence system as its opinion the general approach avoids duplication of obligations and reduces administrative burden for operators and member states’ authorities.

Parliament suggests financial institutions should only provide services to clients who are not causing deforestation. The Commission stated that this would require setting two completely different regulatory tracks for monitoring and enforcement when the EU already has a number or laws addressing the environmental responsibility of financial institutions.

Parliament also widened the definition of deforestation from “the conversion of forest to agricultural use, whether human-induced or not” to include a forest’s conversion to plantation forest. This would mean a situation where trees are planted in a way that maximizes the production of wood. This can not label common forestry practices as deforestation.

The Parliament, Member States and the Commission will now start their trilogy-negotiations from positions quite far from each other. Finnish Industries finds it important that they agree on a balanced and realistic final text.