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18 Nov 2021

Julia Otten, Germanwatch & Johannes Heeg, Initiative Lieferkettengesetz

Curbing deforestation and exploitation in supply chains: How are the two EU due diligence proposals interrelated?

The EU now wants to take action against [forest deforestation]. On Wednesday, 17th of November, it presented a corresponding legislative proposal on deforestation.

In parallel, the EU is currently discussing a Europe-wide supply chain law, which would oblige all companies above a certain size to exercise human rights and environmental due diligence along their supply chains, regardless of their industry.

Is the EU Commission duplicating its efforts with the two proposals? And wouldn’t an overarching supply chain law be sufficient to prevent deforestation? No, because the two projects pursue different approaches. However, they must be considered together.

In the case of the proposed legislation for deforestation-free supply chains, the EU is pursuing a product-based approach: certain critical products that are linked to the destruction of forests or specific ecosystems should only be allowed into the EU’s internal market if they meet certain criteria.

The interesting question, then, is which products are considered “critical.” Germanwatch and other environmental organizations are calling for the inclusion of at least soy, palm oil, rubber, beef, leather, poultry, coffee, cocoa, wood and corn...

On the other hand, the planned general EU supply chain law has a different approach: it is not product-related, but company-related. The idea behind it is that it would apply not only to manufacturers of particularly critical products, but to all companies in the EU above a certain size.

Binding due diligence would require companies to prepare risk analyses and continuously check whether there are risks to human rights and the environment in their global supply chains. If risks are identified, companies are to take measures to eliminate or prevent them, and when damage occurs, companies must also make amends and remediate. Such an EU supply chain law could have a preventive and widespread effect...

The draft law presented by the EU Commission yesterday is a step in the right direction. But according to many environmental organizations, it is not sufficient in its current form to effectively protect forests and other ecosystems.

It excludes the rights of victims to remediation and does not include civil liability as per a previous demand of the European Parliament. Contrary to initial plans, the draft does not classify rubber – a product that is widely used by the European automotive industry – as “critical”...

The EU Commission has therefore weakened its draft at the last minute. There is an urgent need for improvement in these areas.

The Commission’s announcement of a new human rights and environmental due diligence law is expected in December. The German supply chain law can only serve as a model to a limited extent. To protect those affected by corporate abuse, the EU draft law must go well beyond the German one. The content of the draft law will show how serious it is about effectively ending human rights violations and environmental destruction in the supply chains of European companies.

As much as the two legislative initiatives interlock and complement each other, it is also clear that two weak laws do not add up to a strong one.

Part of the following timelines

EU Commission publishes legislative proposal on corporate accountability

EU Commission adopts legal proposal to combat deforestation, following EU Parliament's legislative report pushing for mandatory due diligence & civil liability