Navigating the Uncertainty of Anti-Deforestation Certification and Legislations

The development and implementation of anti-deforestation legislations, like the UK's Forest Risk Commodities Regulation and the EU's Deforestation Regulation, represents significant strides towards protecting global forests. However, these ambitious regulations bring with them a host of uncertainties and challenges that businesses must navigate.

The importance of deforestation certification 

Certification can help demonstrate sustainability in supply chains linked to deforestation. Here, Judith Murdoch, an expert in the RSPO Supply Chain Certification Standard offers guidance in navigating some of the current uncertainty of Anti-deforestation certification and Legislation by focusing on the UK Forest Risk Commodities Regulation and the European Union Deforestation Regulation.  

What is the UK Forest Risk Commodities Regulation?

The UK Forest Risk Commodities Regulation is part of the UK Environment Act. It requires importers with a global turnover of at least £50 million who trade over 500 tonnes of regulated commodities to annually declare that their imports are not from illegally deforested lands. Organisations can utilise deforestation certification to demonstrate adherence to Regulation.

The current situation

In May 2024, UK retailers anticipated the introduction of secondary legislation to enforce the forest-risk commodities regulation. This legislation would require proof that certain commodities, such as palm oil, soy, cattle and cocoa, sourced through their supply chains were not linked to illegal deforestation. These proposals are part of the Environment Act, were expected to be swiftly enacted, with the UK aiming to end deforestation linked to specific commodities by 2025. 

Retailers have been proactive, adjusting their supply chains in preparation for this regulation, aligning with similar upcoming EU regulations. However, the forest-risk commodities regulation was excluded from the pre-election legislative agenda, creating significant uncertainty about its future under a new government and the potential impact on supply chains. 

Recently, UK supermarkets have faced significant uncertainty due to the pause in the previous Conservative government's plans to implement anti-deforestation laws, which has left retailers in limbo. This can then impact organisations working towards deforestation certification.

What are the concerns around the UK Forest Risk Commodities Regulation? 

Apprehension: There needs to be more certainty about how the new Labour Government might handle the current proposals. The industry feared the new administration might not continue with the due diligence regulation, relying instead on the EU's measures. Despite this, it's unlikely that the deforestation due diligence regulation would be opposed as it has built up some widespread support. 

Alternatively, the new government might align more closely with EU legislation, addressing the regulatory gaps that complicate compliance for businesses trading in and out of the EU.  As soon as clarity is received, clearer pathways to deforestation certification should emerge.

Preparation Challenges: There are still some challenges with the due diligence; the primary industry concern is the lack of clear guidance from policymakers, which could impact the readiness of retailers, and other businesses, when the legislations come into effect.  

Retailers are now worried that the new government might rush the implementation of forest-risk commodities regulations as a post-election priority without providing sufficient preparation time or detailed guidance. 

Uncertainty in Northern Ireland: Uncertainties remain regarding how these laws will apply to retailers and traders in Northern Ireland, which benefits from minimal trade barriers with both the UK and the EU single market. 

The European Union Deforestation Regulation

When compliance with the EUDR becomes mandatory at the end of December 2024, the regulation will require large companies trading in seven key commodities (and their derived products) to demonstrate that these goods do not originate from recently deforested areas or contribute to forest degradation.   

The EUDR aims to reduce the EU market's impact on global deforestation, forest degradation, and biodiversity loss, promote deforestation-free supply chains, decrease the EU's contribution to greenhouse gas (GHG) emissions, and protect human rights and the rights of Indigenous peoples. Deforestation certification could play a pivotal role in demonstrating compliance to the EUDR.  

The current situation

• Getting prepared: Companies that fall into scope are examining their supply chains, assessing potential risks, working with certification schemes, and deciding on IT systems and processes. The correct preparation at this stage will contribute to organisations having a good foundation for working towards deforestation certification.

• Waiting for an update: An important update to the EUDR FAQ is expected to be released imminently. This will provide further clarity around some of the terms and requirements, preparations, and how companies can use voluntary certification schemes such as the RSPO, and more about how to implement the EU IT system.

• Supporting IT systems in development: The RSPO is developing a new integrated digital platform for certification, trade, and traceability called PRISMA. This new platform will help to facilitate the gathering and flow of information from a plot of land to retail/CGM. It will allow members to upload/download information that is not required by the standards but that is required by EUDR thus creating a practical support tool for their members to demonstrate compliance. The platform would also benefit organisations in evidencing actions they are taking as part of their deforestation certification.

What are the concerns around the European Union Deforestation Regulation? 

• Adverse impacts: Some organisations have voiced concerns about the structure and terms of the legislation and the potential adverse impacts on costs, stock, and extra administration it may have.

• Country risk benchmarking: Certain producing countries have concerns about the country risk benchmarking section of the legislation. The EU has been meeting with officials from Malaysia and Indonesia to support the move toward complying with the EUDR. Discussions with Malaysian officials have been about leveraging the existing sustainable palm oil certification (MSPO) to meet EUDR requirements. Indonesian officials have been working as part of the EU Joint Task Force with a focus on traceability involving smallholders, enhancing the availability of forest maps, and meeting regulatory alignment.

• More transparency of the EU IT System: Recently, a group of organisations wrote to the European Commission about the EU IT system that is due to be rolled out to manage the due diligence statements. They have suggested that there be further testing, more flexibility around the type and size of files that will be accepted, and extra time for companies to familiarise themselves with the system.

Is Anyone EUDR Compliant Yet?

It has been reported that a farm based in India will be the first farm verified by the Rainforest Alliance to ship EUDR-compliant coffee beans to Europe. In addition, The Rainforest Alliance has been supporting smallholder farmers in aligning with EUDR through traceability and deforestation risk mapping. 

Businesses are facing a complex landscape of compliance and uncertainty as they prepare for these legislations, with the need for further clarity of information at the forefront of everyone’s mind. The BM TRADA certification experts remain dedicated to supporting clients through these transitions, ensuring their supply chains remain compliant and resilient.

We will keep you information of the latest updates and insights on these pivotal regulatory developments and how they will play a role in deforestation certification.