What makes an effective law to stop commodity-driven deforestation?

Inaction over the last decade has shown that voluntary measures alone are not enough to halt deforestation. For change at the speed and scale necessary, we need regulation. And it has to be effective.

Ending deforestation is the only way to reach net zero. It is essential to preserving vital ecosystems. It is necessary to safeguard the livelihoods of the 1.6 billion people who rely on forests. And what’s more, it is a solvable crisis. 

Over the past two years we have seen growing international consensus over the need to end deforestation. For the first time, halting and reversing deforestation made it into the final text agreed at COP28 in Dubai in December 2023. The UK Government used the same conference to set out its intention to prevent the use of forest risk commodities derived from illegally deforested land in UK supply chains. When the secondary legislation is passed, businesses with a global annual turnover of over £50 million and who use over 500 tonnes of regulated commodities will be in scope.

This legislation follows the European Union Deforestation Regulation (EUDR) which became the world’s first deforestation due diligence law, and was passed in June 2023. 

In the United States, the FOREST Act has been re-introduced to the US Senate. If passed, this would prohibit the import of products made from commodities produced on illegally deforested land.

All these international laws vary in their scope and specificity. So what does a ‘good’ law look like for it to be effective in stopping commodity-driven deforestation?

Legal and illegal deforestation

All deforestation has devastating consequences for ecology, biodiversity, the climate, and human rights. Laws that only cover legal deforestation are at risk of ignoring a huge proportion of a country’s total deforestation footprint.

Currently, the EUDR covers all deforestation, while the UK Environment Act only covers illegal deforestation.

Almost a third of global tropical deforestation is considered legal, as weak laws in some producer countries permit a significant amount of deforestation.

Determining which deforestation is ‘legal’, and which isn’t, can be very difficult. There are variations in laws across countries, inconsistent standards, and poorly implemented regulations. Governments can reverse or dilute existing laws to protect forests, so that illegal deforestation today may become legal in the future – as seen with the weakening of Brazil’s Forest Code under the Bolsonaro government. This means that legislation that only targets ‘illegal’ deforestation can run the risk of accelerating deforestation rates by providing economic incentives for deregulation in producer countries.

Environmental legislation should implement a zero-deforestation standard aligned with the Accountability Framework, to include both legal and illegal deforestation. This offers clarity and consistency, and promotes collaboration with producer countries to uphold laws preventing commodity-driven deforestation in line with international standards. Tackling both types of deforestation, illegal and legal, also means we are eliminating more of the deforestation linked emissions.

All forest-risk commodities

Between 90% and 99% of all tropical deforestation is driven directly or indirectly by agriculture – to produce commodities that are traded and consumed around the world. 

The three biggest drivers are beef, soy and palm oil, which account for 60% of all deforestation globally. But while governments have a clear responsibility to regulate their imports of these commodities, they should not neglect the deforestation caused by other commodities, including timber, cocoa and coffee. 

Deforestation legislation must be broad enough to cover not only the current state of deforestation, but also to adapt to future scenarios. Applying the same requirements to all forest–risk commodities streamlines regulations, supports ongoing risk assessment, and allows for policy improvements – speeding up the road to deforestation-free supply chains and thereby mitigating the impacts of climate change and biodiversity loss.

Read more about why the UK Environment Act should be extended to include all forest-risk commodities.

All companies regardless of size or turnover

Many businesses are already aware of deforestation risks, yet far too few are engaging voluntarily to eliminate deforestation from their supply chains.

Without legal regulations, there is less incentive to act – and many are unwilling, believing there is a competitive disadvantage to doing so. Governments have the power and responsibility to set clear standards and facilitate industry-wide cooperation to end the market for deforestation-linked goods.

Clear, cohesive and comprehensive legal requirements for all companies, regardless of size or turnover, are needed to level the playing field and raise the floor on standards for due diligence and disclosure to the public.

Including the finance sector 

Through their loans and investments, financial institutions provide the capital that drives deforestation. 

Our Deforestation Action Tracker (DAT) shows that even though groups like the Glasgow Financial Alliance for Net Zero (GFANZ) have said net-zero transition plans are incomplete without action on deforestation, the majority are still not acting. 

75%

of the more than 700 financial institutions assessed by the Deforestation Action Tracker do not have deforestation policies

Financial institutions have the power and influence to drive change by engaging with the companies they invest in. The data, tools and guidance are available to help financial institutions eliminate deforestation from their portfolios. Laws that include the finance sector will drive action and force the laggards to act.

Associated human rights

The deforestation crisis is also a human rights crisis. There is no way to tackle deforestation without addressing the associated human rights abuses. One of the most effective ways to reduce deforestation rates is to respect the customary land tenure rights of Indigenous peoples and local communities.

Deforestation laws need to include action on human rights because currently companies and financial institutions cannot be relied on to address their own human rights impacts. 

It is essential that governments extend the scope of due diligence measures to address human rights abuses, in alignment with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. 

Other wooded lands

Tropical forests are not the only natural ecosystems essential for biodiversity and mitigating the impacts of climate change. Legislation that exclusively focuses on rainforests is in danger of shifting the target of environmental exploitation onto other vulnerable ecosystems – in particular wooded savannah, grasslands and wetlands. 

Research by data-driven transparency initiative, Trase, has found that restricting the application of the EUDR to rainforests would leave vulnerable ecosystems unprotected, especially the Cerrado (Brazil), the Chaco (Bolivia, Paraguay and Argentina), the Pantanal (Brazil, Bolivia and Paraguay) and the Pampa (Argentina, Uruguay, Brazil).

Current EUDR legislation leaves:

Legislation should be extended to protect all natural ecosystems where agricultural commodities are produced. A narrow focus on forests risks exacerbating environmental destruction in other threatened biomes.

“Deforestation laws with ambitions on biodiversity and climate cannot just cover tropical deforestation. They need to be thinking of other ecosystems and other biomes, so particularly dry forests in the Cerrado, but also biodiversity hotspots in other ecosystems like grasslands and wetlands as well.”

Helen Bellfield, Global Canopy Policy Director

The responsibility for mitigating the climate and nature crises cannot be left to producing countries. Importing traders and governments have a crucial role to play. Laws regulating international trade have the power to transform global supply chains and hold companies and financial institutions accountable for their role in driving deforestation.

To meet the global pledge made at COP28 in Dubai to halt and reverse deforestation, clear, unified and comprehensive legislation is essential. Effective laws can lead the way in protecting our planet from environmental exploitation and ensuring sustainable commodity production for generations to come.

Our legislation resources

Insights

• US FOREST Act: Lack of progress leaves forests at risk
• Regulation is essential to meet international commitments to halt and reverse tropical deforestation
• Finance sector should be regulated, MPs told
• New guidance helps financial institutions grapple with deforestation due diligence
• Due diligence legislation for the finance sector is “the most important thing the UK can do”
• Beef companies failing to protect human rights
• EU urged to widen deforestation law

Publications

• Deforestation and human rights: too many companies and financial institutions ignoring the critical link

Read the briefing

Dominika Gregušová, Pexels

On the UK Environment Act

• Global Canopy response to DEFRA public consultation on Implementing due diligence on forest risk commodities
• JOINT NGO BRIEFING ON DUE DILIGENCE AND DEFORESTATION (SCHEDULE 16)
• Written evidence submitted to the Environmental Audit Committee by Global Canopy