Deforestation-free supply chains
Coffee and cocoa for breakfast, palm oil in shampoo and ice cream, soya fed to pigs and chickens, natural rubber used in car and bicycle tires: By consuming these agricultural commodities, we contribute to deforestation in the tropics every day. 90% of deforestation in the tropics is caused by agriculture. Between 2001 and 2015, just seven agricultural commodities led to the deforestation of an area twice the size of Germany: beef, palm oil, soya, cocoa, natural rubber, coffee and plantation wood. A considerable proportion of these deforestation-causing agricultural commodities are traded globally.
At the same time, forests are essential to the climate, to biodiversity, and, at least in the medium term, also to agriculture. They are to the livelihoods of millions of people.
So far, measures to halt the destruction of forests have not been sufficient: Joint goals of the international community to halt deforestation by 2020 (as in SDG 15.2) have not been achieved. In 2023, 3.7 million hectares of tropical primary forest were lost, which, despite a 9% decrease from 2022, remains almost as high as in 2019 and 2021.
In view of the persistently high deforestation rate, we are also far off track for the new target of halting deforestation by 2030. According to the FAO, 10 million hectares of forest continue to be destroyed worldwide every year - that is almost equivalent to the entire forest area of Germany.
However, without effective forest protection, the goals of the Paris Climate Agreement, the Convention on Biological Diversity and the Sustainable Development Goals (SDGs) cannot be achieved.
We simply cannot afford ongoing deforestation. Although tropical rainforests cover less than 3% of the earth, they are home to more than half of all terrestrial animal species. If rainforest ecosystems remain threatened, this will lead to further significant losses of biodiversity. Many indigenous communities are already endangered by the destruction of the forests. Forest ecosystems (such as the Amazon in South America) are extremely important CO2 reservoirs for the climate, and they are approaching tipping points that threaten to imbalance the global climate. As early as 2021, Nature Climate Change published a study indicating that the Amazon now emits more greenhouse gases than it absorbs. If deforestation was a country, it would have the fourth-largest greenhouse gas emissions in the world. Global agriculture also depends on an intact forest ecosystem and its services. In the medium term, the economic damage caused through lack of action is likely to be significantly higher than the expenditure needed for forest protection.
Previous approaches, including voluntary measures such as private sector certification systems and sustainability reporting by companies, have not had sufficient impact to solve the global problem of deforestation and forest degradation. Regulatory EU measures focused solely on timber, such as the EU Timber Regulation (EUTR), have also not yet been sufficiently effective.
Deforestation and the EU's responsibility
The EU is in second place on the global ranking of forest destruction through daily consumption, right after China, the largest importer of deforestation caused through agricultural commodity production. India, USA and Japan follow on third to fifth. In 2017, the EU was responsible for 16% of deforestation in the tropics caused by international trade in agricultural commodities, China was responsible for 24%, India for 9% and the USA for 7%. Essentially the EU caused around 3.5 million hectares of deforestation in the tropics between 2005 and 2017, which is equivalent to the area of Baden-Württemberg. Soya, palm oil and beef have the largest deforestation footprint of all imported raw materials from the tropics - followed by wood products, cocoa and coffee. The EU ‘imports’ the most deforestation through agricultural commodities from Brazil, Indonesia, Argentina and Paraguay. During this period, EU's largest economies - Germany, Italy, Spain, the United Kingdom, the Netherlands, France, Belgium and Poland - were responsible for 80% of deforestation in the EU.
A study by Forest Trends (2021) also shows that more and more land is being cleared illegally for commercial agriculture, accounting for around 69% between 2013 and 2019.
The EU regulation on deforestation-free products (EUDR)
The adoption of the EU regulation on deforestation-free products (EUDR) is a milestone for global forest protection. It entered into force on June 29th, 2023 and is the world's most ambitious initiative to stop deforestation. The EUDR creates a clear competitive advantage for producers that are proven to be deforestation-free. Thus, the EUDR creates a level playing field for companies: It rewards pioneering companies that have been committed to deforestation-free supply chains for some time and obliges the laggards to also tackle deforestation in their agricultural supply chains.
In doing so, the EU aims to minimize its impact on deforestation and forest degradation and takes important steps to mitigate climate change and reduce greenhouse gas emissions.
The EUDR stipulates that commodities and certain products derived from coffee, cocoa, natural rubber, palm oil, beef, leather, soya and wood may only be imported into the EU, produced in the EU or exported from the EU if they have been deforestation-free (in the case of wood production without forest degradation) since the cut-off date 31.12.2020. In addition, production must have taken place in accordance with the relevant legislation of the country of production. Operators and traders who place the commodities or products on the EU market or trade it within the EU must submit a due diligence declaration showing compliance with the first two obligations, including the geocoordinates of the plots of production. The EUDR is currently in a transition phase. For bigger companies, it will apply starting 30th of December 2024, for small and micro enterprises within the meaning of EU Directive 2013/34/EU (Article 3) 30th of June 2025.
The EUDR is based on the same principle as the German Supply Chain Due Diligence Act or the upcoming EU Directive on Corporate Due Diligence.
In order to fulfill their due diligence obligations, companies are required to collect relevant information as proof of deforestation-free and legal production and to carry out a risk assessment based on this. If there is a non-negligible risk, risk-mitigating measures must be taken, such as providing support to smallholders. The obligations of a company depend on its size and role within the supply chain. The main burden lies with companies that place relevant products - mainly unprocessed products based on the seven commodities mentioned above - on the EU market for the first time.
Without documentation requirements, the EUDR cannot function – because for the law to not be completely toothless, authorities must be able to enforce it . In Germany, the Federal Office for Agriculture and Food (BLE) is responsible for this. The scope and focus of the controls depend on how high the risk of deforestation is in the region where the products are grown. The EU Commission creates a so-called country benchmarking system for this purpose, which categorises countries and parts of countries into risk categories. The due diligence obligations of the EUDR are specifically aimed at companies; there is no import ban, and producing countries and smallholders are not sanctioned under the EUDR if they do not fulfil the requirements.
Accompanying measures of the EUDR
For years, the EU and its member states have been supporting actors along the entire supply chain in protecting forests, in some cases with great commitment. Article 30 of the EUDR now provides a conceptual framework for this cooperation. The European Commission and interested Member States shall coordinate closely on this basis and expand their offers of cooperation with the producer countries affected by the Regulation in order to support them through various projects and accompanying measures. Article 30(2) EUDR emphasizes that all stakeholders should be involved, including civil society, indigenous peoples, local communities, women, the private sector, micro-enterprises and smallholder farmers. Cooperation can, for example, consist of structured dialogues, joint development of strategies and measures to curb deforestation and the involvement of multilateral forums or international organizations.
The aim is to facilitate the transition to agricultural production in line with the regulation and the following accompanying measures are already being implemented as part of the cooperation. They primarily serve to inform stakeholders in the producing countries about the EUDR and to support the implementation of the EUDR in the partner countries.
Implementation of deforestation-free supply chains in partner countries
Most forest land is converted into agricultural land in South America and South-East Asia. In Africa, in addition to commercial agriculture, subsistence farming and firewood for everyday use play a central role in deforestation. Locally, mining, infrastructure and the expansion of cities are also key drivers of deforestation.
What challenges and levers are there in the producing countries?
- Translating commitments into national targets and laws
- Implement law enforcement and corresponding sanctions
- Establish suitable monitoring systems to identify deforestation hotspots
- Effective land use planning to preserve areas that are particularly worthy of protection
- Strengthen intersectoral coordination to harmonise different interests and eliminate contradictory incentive systems
- Promote national and sub-national multi-stakeholder initiatives and public-private partnerships that bring together government, civil society organisations, businesses and associations
- Adequately implement policies and legislation at subnational level
- Establish incentive mechanisms that promote the production of sustainably produced goods