Despite a 12 month delay, significant elements of queries around the European Union Deforestation Regulation (EUDR) remain unconfirmed or unresolved.
One of these is the country benchmarking. This will give each country a risk level, the risk that a commodity from said country is linked to deforestation or forest degradation. The country will be classified as low, standard or high risk.
The higher the risk, the more detailed the due diligence requirements will be and the higher the cost for the companies. Furthermore, the EU must keep a dialogue with any ‘high risk’ country.
While the benchmarking is yet to be released, this doesn’t mean that it hasn’t already sparked controversy. In December last year, for example, the EU Parliament passed a proposed ‘no risk’ status, which was soon scrapped after facing opposition.
Nevertheless, the benchmarking, and its methodology, remains the subject of deliberation
A new joint letter responds to the ambiguity around the benchmarking. Signed by groups such as the Human Rights Watch, WWF and Friends of the Earth, it posits several areas where risk levels could be unjustifiably lowered, and urges the commission not to lose sight of its goals.
Luciana Tellez-Chavez, a senior researcher in the environment and human rights division at Human Rights Watch (HRW), suggests that there is a risk the methodology could lead to countries being unjustifiably classified low risk.
This would not only, she suggests, be bad for the goals of the regulation itself - reducing deforestation and forest degradation - but bad for companies as well.
“This benchmarking is informing them where the risk of non compliance is highest,” she explains.
“And based on that information, companies are going to invest resources in due diligence and locate the highest risk suppliers.”
If benchmarking is misleading, adds Fyle Strachan, policy and communication lead at Earthsight, companies may be “bringing in products that inadvertently breach the regulation, which is potentially going to leave them… non compliant with the regulation.”
A regulation driven by sanctions?
The annex of a communication from the commission released late last year explores the general principles on the methodology of the benchmarking.
Among other things, the annex suggests that ‘special attention’ will be paid to countries that are under EU Council and UN Security Council sanctions. According to the annex, the reason for this special attention is the difficulty of conducting due diligence along the value chains of said countries.
The joint letter suggests that while ‘ambiguous,’ this wording ‘appears to imply’ that it is only countries under sanctions that will be classified as high risk.
This, it suggests, is a departure from the goals of the EUDR itself, which focuses primarily on regulating commodities based on their links to deforestation or forest degradation. Considerations of sanctions, it suggests, while important, should not take precedence over this.
“Of the countries that are under UN sanctions, and there’s not very many, the majority of them are not actually countries where deforestation is occurring on a large scale,” Tellez-Chavez points out.
“It would be misdirecting the efforts of enforcement authorities and of companies own due diligence states too.”
The importance of forest degradation
While the regulation may focus most prominently on deforestation, forest degradation is featured within both its title and body. Forest degradation is a process which damages a forest but doesn’t necessarily remove it completely.
However, in the general principles annex, the focus of the principles of benchmarking is focused on deforestation, with few mentions of forest degradation.
The joint letter urges the commission not to side line the issue of forest degradation.
If the benchmarking only takes deforestation into account, and not forest degradation, then it may inaccurately present the risk level and thus likelihood of compliance according to the EUDR’s original text, points out Earthsight’s Strachan.
For example, the destruction of natural forest to make way for implanted forest may be considered a net increase or at least not a net decrease of forest cover under these guidelines, she suggests.
Human rights and deforestation
The letter also points out that, according to the annex, human rights factors will only be considered only in a ‘further assessment’ which is ‘possible.’ The letter suggests that this departs from the original text of the EUDR.
Some human rights abuses, it stresses, have taken place in areas at low risk of deforestation. Therefore, when benchmarking, human rights should be considered alongside deforestation itself, stresses the letter.
To comply with the regulation, one must be compliant with local laws in the country from which the commodity is sourced, HRW’s Tellez-Chavez points out.
“Those laws include labour rights, land rights, anti-corruption laws [and] tax laws. Another one that’s defined there, which is not exactly a domestic law, but it’s included in that package, is the principle of free, prior and informed consent, as defined in the UN Declaration on the Rights of Indigenous People.”
Putting human rights at the centre of the benchmarking Tellez-Chavez suggests, means that businesses are more likely to be complaint with the above legality requirements.
Production trends for all commodities
According to the general principles annex, the letter states, production trends will be considered only for the commodities timber and cattle.
This, the letter suggests, would narrow the scope of the EUDR, which pledges to consider ‘relevant commodities and relevant products.’
Production trends for all commodities should be looked at, the letter states.
Could trade agreements affect risk levels?
The EU recently signed a trade agreement with the Mercosur countries, a trading bloc which includes Brazil, Argentina, Bolivia, Paraguay and Uruguay.
Much of the world’s deforestation takes place within these countries. According to the organisation WWF, four of these five countries have among the fastest deforestation rates in the world.
The open letter therefore questions whether such a trading agreement could affect the EU’s willingness to give these countries a high risk status.
“The new provisions included in the annex to the trade and sustainable development chapter of the EU-Mercosur agreement, entail fundamental changes in how the EU Deforestation Regulation will work in practice,” explains Julie Zalcman, trade campaigner at Friends of the Earth.
It says, she explains, that the agreement shall be “favourably considered” in the process of risk classifying countries.
“This seems inconsistent with the Commission’s obligation under the EUDR that the benchmarking exercise ‘be based on an objective and transparent assessment’. The country benchmarking should be conducted on the basis of clear, objective and scientific criteria. Trade agreements such as EU-Mercosur should not undermine evidence-based risk classification.”
The European Commission was contacted for a response.