Defra plans crackdown on deforestation in UK corporates' supply chains

Large companies in the UK could soon be mandated to prove that their supply chains are free from illegal deforestation or face hefty fines.

Large companies in the UK could soon be mandated to prove that their supply chains are free from illegal deforestation or face hefty fines, under new due diligence legislation being developed by the Department for Food, the Environment and Rural Affairs (Defra).

The Department has this week launched a consultation into whether the UK Government should introduce a new law designed to prevent forests and other rich habitats in supply chains abroad from being converted into agricultural land. More often than not, this process violates local laws around nature protection.

The proposed law would require large, UK-based businesses to prove that the ‘forest risk’ commodities that they use have been sourced using deforestation-free processes. Defra includes soy, palm oil, cocoa, beef, rubber and leather alongside forestry products like wood and paper in this category.

Such companies would need to publicly disclose information on the origins of these commodities and further information to prove that they were produced in line with local laws. Failure to do so would result in fines, with figures set to be determined by Defra after the six-week consultation.

Defra said in a statement that the new legislation would form part of the UK’s commitment to contribute to the creation of a “greener, fairer and more resilient global economy” in the wake of Covid-19 and in the run-up to COP26.

"Ahead of hosting the UN climate change conference next year, the UK has a duty to lead the way in combating the biodiversity and nature crisis now upon us,” international environment minister Lord Goldsmith said.

The new law would build on the UK Government’s creation of the Global Resource Initiative (GRI) taskforce in 2018. The taskforce convenes 17 leaders from the private sector, public sector and NGOs, with companies represented including Tesco, McDonald’s, Legal & General and Cargill and participating NGOs including WWF and Forest Coalition. This cohort has been urging Defra to set a legally binding 2030 target to end deforestation in supply chains for the past five months.

Wood for the trees

The launch of the consultation comes amid reports that deforestation in the Amazon has dramatically increased since the World Health Organisation first declared Covid-19 a pandemic. According to WWF, deforestation was up 150% in March 2020 compared to the average figures for March 2017, 2018 and 2019. Those clearing land are thought to have been taking advantage of reduced patrols.

Around 80% of deforestation in tropical forests can be attributed to agri-food production and, more broadly, the IPCC has found that 75% of deforestation to date, across all regions, is linked to the agri-food sector.

As such, Defra’s proposals have attracted cautious optimism. James Corlett, a partner specialising in supply chain risk at law firm Fieldfisher, called the move “a step towards improving environmental governance in the UK and internationally”.

"Recent scrutiny on the impact some large companies are having on the environments suggests a number of businesses may already be pushing the boundaries of legal and ethical practice,” Corlett said.

“While big business is not the only culprit, the focus of the proposed legislation on larger companies is appropriate, as the obligations should filter down through smaller suppliers.”

"This consultation is a welcome first step in the fight to tackle the loss of our planet's irreplaceable natural wonders such as the Amazon and in the pursuit of supply chains free from products that contribute to deforestation," the Greener UK Coalition’s senior parliamentary affairs associate Ruth Chambers said.

"The evidence linking deforestation with climate change, biodiversity loss and the spread of zoonotic diseases is compelling. A new law is an important part of the solution and is urgently needed.”

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