A landmark piece of EU legislation is agreed! (but is it sustainable?)

Today, on May 16th 2023, the Council adopted a landmark piece of legislation which is the EU Deforestation Regulation or EUDR. Since the first day at which the European Commission released its proposal in November 2021, it was both hailed as "critical for the protection of the world's forests" and criticised as a "neo-kolonial trade barrier". So let's take a step back and see it for what it is.

The first thing we should do is recognise Europe's leading role in driving sustainable palm oil. No less than 93% off all palm oil being imported into Europe for food, feed and oleochemicals is RSPO certified and the continent accounts for 45% of the total global use of certified sustainable palm oil. Those are numbers, Europe should be proud of. And now the EU is taking a next historical step, by being the first major geographical area in history to draw a line in the sand by saying: we will no longer consume products that have contributed to deforestation. This is a clear and laudable statement that we must congratulate the EU on.

Are there risks for leakage to other (less sustainable) markets? Yes of course. But the EU can only legislate for its own territory and the EUDR will undoubtedly serve as a first legislative mover that will - in time - lead to similar developments in other parts of the world as companies demand a level playing field.

So what are the challenges?

There are still a lot of uncertainties about the way the EUDR shall be implemented and exactly what is required from the companies. One of these, is that it requires companies to prove that the commodities are sourced in compliance with the "relevant legislation in the country of production". Article 2.28 further defines this as including inter alia land use rights, third parties rights, labour rights and human rights. Each of these concepts is a volume of encyclopedia by itself. So what should you comply with and how do you demonstrate that? Which documents will European national agencies want to see? And can you even demonstrate land use rights in area's where customary tenure rights prevail?

But perhaps a broader pitfall (with more significant negative impacts) is if European companies now make the mistake of thinking that complying with the EUDR gives them the right to call their commodities "sustainable". It so, they are sorely mistaken. Whilst I applaud the EUDR for what it is (a brave attempt to stop the EU's own contribution to global deforestation through consumption), its narrow focus on the two issues of legality and deforestation carries a huge risk. Sustainability is so much more than these two issues and - more importantly - we cannot achieve our environmental goals if we do not anchor our environmental ambitions in the social reality of the people on the ground.

The RSPO estimates that there are 7.000.000 smallholder farmers directly involved in palm oil production alone, with a multitude of that amount of people being dependent on their income. If European companies only focus on a narrow compliance with EUDR and forget the interdependencies between the environmental and the social Sustainable Development Goals we run the risk of missing out on both. We can end up not achieving our environmental ambitions AND harming smallholder farmers, their families and local communities in the process by excluding them from the European supply chain.

To mitigate this risk it is crucial that:

a) National competent authorities properly value the existing certification schemes, for their risk based approach to screening and understand the role of the RSPO's credit system and Independent Smallholder Standard in the global palm oil ecosystem.

b) The implementation of the EUDR (especially with regards to geo-location, traceability, proof of deforestation etc.) is done in an inclusive manner which allows smallholders to participate in the European supply chain.

c) All companies in the supply chain take their responsibility by transforming their supply chains in a smallholder inclusive manner without putting the financial burden of the transition on the smallholders' shoulders.

d) European companies uphold their responsible sourcing policies and promises by keep using the RSPO credit system to support smallholder farmers, also after the coming into force of EUDR.

e) The European Commission must actively and soon fulfil its obligation under Article 28 of the EUDR to engage with the governments of producing countries. They should address the issues of potential leakage to other markets and jointly come to an effective implementation of the EUDR which addresses both the need to end deforestation and the right to socio-economic development. As prescribed Article 28.2 these partnerships and cooperations must take place allowing the full participation of all stakeholders, including civil society, indigenous peoples, local communities, women and the private sector including micro enterprises SMEs and smallholders.?

So yes, the EUDR is a hugely important piece of legislation. With 27 countries jointly committing (through legislation!) to stop consuming commodities related to deforestation, it can even be called groundbreaking. But by itself it cannot be called sustainable.

It is no magic bullet and will not solve deforestation on its own. It is an important tool in the global toolbox to shape a better world, but it must be flanked by all of the measures mentioned above. Because only if we make deforestation part of the "just transition" agenda and make sure that we do not leave the most vulnerable behind, can we truly say that we are moving towards the sustainable global commodity trade we all strive for.

So, congratulations to the EU for this landmark achievement.

Now let's get to work to make it sustainable!

Ruben Brunsveld,

Deputy Director EMEA at the RSPO

P.S. If you want to join the discussion on how to make EUDR inclusive, please join us at the Sustainable Palm Oil Dialogue 2023 on June 14th in Frankfurt Germany, where we will have this high on the agenda!