The telecoupled implications of the new EU Regulation on deforestation-free products (EUDR)

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Editor's Note: The following blog post is based on a May 2023 webinar hosted by GLP's Telecoupling Research Towards Sustainable Transformation of Land Systems Working Group. You can View a recording and download slide decks from the event.

Written by Johanna Coenen, Cecilie Friis, Almut Schilling-Vacaflor, Mairon G. Bastos Lima, and Armando Valdés-Velasquez

Deforestation is one of the most pressing global challenges in relation to the climate and biodiversity crises. Recently, the European Union (EU) has taken a step towards addressing this challenge by adopting the new EU Deforestation Regulation (EUDR) to secure deforestation-free supply chains. The aim of the EUDR is to minimise the EU’s contribution to global deforestation and forest degradation, greenhouse gas emissions, and biodiversity loss through securing “deforestation-free supply chains” of seven forest-risk commodities being imported or exported from the EU market. The regulation requires so-called “operators” and traders who place soy, cattle, palm oil, wood, cocoa, coffee, or rubber as well as some of their derived products on the EU market to document that the products do not originate from recently deforested land or induced forest degradation. The cut-off date for “recently deforested land” is specified in the regulation as December 31, 2020. The EUDR was ratified and entered into force on June 29th, 2023, giving operators and traders 18 months to implement the new regulation, as its requirements will become applicable on December 30, 2024.

The EUDR has been heralded by much civil society as a significant and innovative step in the fight against global deforestation, yet substantial critique has also been raised about the challenges and distribution of its implementation costs, the high risk of simply displacing deforestation, and the risk of excluding (already vulnerable) smallholder farmers and producers (Köthke et al. 2023; Zhunusova et al. 2023). With its aim of regulating flows of goods in and out of the EU, the EUDR exemplifies a new type of governance tool responding to sustainability challenges in telecoupled land systems (Newig et al. 2019). The uncertain implications of the regulation in both immediate and longer terms, however, require further research attention.

In this blog post, we open this discussion of consequences and effectiveness of this new supply chain regulation. The blog post is based on a webinar hosted by the GLP working group on Telecoupling Research towards Sustainable Transformation on Land Systems  in May 2023 featuring inputs from three GLP researchers, Almut Schilling-Vacaflor (Osnabrück University), Mairon G. Bastos Lima (Stockholm Environment Institute), and Armando Valdés-Velasquez (Wyss Academy for Nature and Universidad Peruana Cayetano Heredia).

As a first insight, Almut Schilling-Vacaflor emphasised the need to study the EUDR in light of its implications and effectiveness in the context of broader debates on how to secure adequate human rights and environmental due diligence (HREDD) approaches in sustainability governance. The telecoupling perspective is highly relevant here, due to its explicit attention to both the demand side and the supply side of global commodity chains, as well as the transnational relations between state and non-state actors that tie telecoupled land systems together. 

On the demand side, it is important to understand how companies develop their compliance with HREDD obligations, by studying how they interpret and put into practice their due diligence systems (risk assessment, prevention and mitigation measures, progress tracking, grievance mechanisms, reporting, stakeholder consultation). On the supply side, the implementation and consequences of HREDD laws are still under-researched. Questions such as whether suppliers comply with new binding rules by improving their social and environmental performance or rather only by symbolic means or by shifting products associated with human rights violations or environmental damages to less demanding markets require further research. The underlying fundamental question here is whether adverse environmental and social impacts in production-landscapes will actually be prevented, mitigated or remediated as a result of new HREDD laws. Previous research on the governance of telecoupling has shown the importance of the domestic regulatory context for the effectiveness of new HREDD laws (Schilling-Vacaflor et al. 2022). More research is therefore needed on the regulatory interactions between HREDD laws and domestic regulations, law enforcement, and public monitoring systems in the production landscapes.

Moreover, insights from telecoupling research show the importance of transnational linkages between state and non-state actors from both the demand and supply sides for activating mechanisms that hold companies accountable for complying with their due diligence obligations in a meaningful way (Gustafsson et al. 2023). Unfortunately, the EUDR provides limited possibilities for participation and recognition of stakeholders and rights-holders from the production landscapes targeted by the regulation. For example, the regulation does not include any provisions for respecting and securing land tenure rights, and it is also only planned to establish a “Forest Observatory”, not a “Social Observatory” on the impacts of the regulation. On a broader level, this gives rise to concerns regarding – and an associated need to study – whether adverse environmental and social impacts will actually be prevented, mitigated or remediated.

Similar perspectives were raised by Mairon G. Bastos Lima, who argued for the need to look beyond the narrow scope of the targeted areas and implementation of the EUDR. He flagged three crucial issues tied to deforestation that the land system science and telecoupling research community could and should address. First, the EUDR focuses on combating commodity-driven deforestation but it only covers forests.1 In the process, other highly biodiverse lands such as the savannah region of the Cerrado and the semi-dry region of the Chaco in South America are overlooked and remain exposed to agriculture-driven deforestation and degradation. The risks of leakage and displacement from protected to unprotected regions are well-known in land system science (e.g., Meyfroidt et al. 2020; Moffette & Gibbs, 2021; Villoria et al. 2022), yet that remains unaddressed in the policy. 

Secondly, the EUDR’s focus on land-use change and forest loss risks missing the wood for the trees in terms of the broader implications of international value chains and trade in forest-risk commodities. For example, questions related to  local food security, livelihood security, or the societal impacts of such landscape transformations need further consideration, otherwise the regulation may help address one sustainable development issue while creating another. Finally, the EUDR fundamentally aims at addressing problems within the current system of production from a “do no harm” approach, thus assuming the benignness of existing production arrangements. However, the distribution of social and economic benefits and burdens from such commodity production is far from even – with some authors calling it a form of maldevelopment in some regions (Russo Lopes et al. 2021). There is a clear need for exploring what policy instruments and shifts in incentive patterns could lead to a land-use transition and sustainable development in tropical landscapes (Russo Lopes and Bastos Lima 2022). Alternatives to current production systems, such as smallholder-led biodiverse systems in places such as the Amazon or the Cerrado illustrate how solutions can go beyond ‘do no harm’ and involve more ‘do good’ to promote sustainable land use (Brondizio et al. 2021; Medina et al. 2022).

The effects of the regulation in the production landscapes were also the main concerns of Armando Valdés-Velasquez, who argued that the telecoupling perspective allows us to zoom in on how the regulation ultimately affects the well-being of the landscapes and forest-dependent communities in the targeted areas. While much of the current discussion on the EUDR centres around the sanctioning mechanisms in case of companies’ non-compliance, an equally relevant question is how incentives for change are created for actors on the ground. Armando raised four issues related to consumption levels, policy coherence, power struggles, and traceability.

To begin with, the regulation is unlikely to have a significant impact globally, given its sole focus on sourcing of commodities and its lack of attention to the underlying consumption patterns driving trade in forest-risk commodities. Second, the EUDR is unlikely to have meaningful effects unless policy coherences are considered both internationally and in the producing countries. A critical question to ask is whether and how existing policies of producer countries complement or are in conflict with the EUDR with regards to fostering a deforestation-free economy. A related question is whether European actors will create policy coherences between the EUDR and other development and environmental policies. Will European development agencies align their portfolios with the new legislation, by, for example, providing technical assistance and capacity building for implementing the provisions of the EUDR in countries of the Global South? Third, issues of power should not be overlooked. There is a risk that the regulation gives companies and intermediaries more power on what happens on the land. As it is easier to supervise and engage with a few established companies than with many smallholder farmers that are at best loosely organised, the regulation might inadvertently favour formal structures over voiceless or voice-diminished groups of farmers, who are thus at risk of being excluded from value chains and important market outlets. Lastly, traceability remains a core challenge. In many production areas, there exist no unique regional cadastre, which means that different actors from government, private sector and civil society use different spatial information, which will inevitably lead to conflicts in tracing products to a specific location. As different systems of traceability exist and are now being developed, it is highly challenging to integrate information and agree on the basic reference point for risk assessments.

Although the EUDR gives rise to many concerns and may come to have some problematic implications, positive perspectives and opportunities were also brought forward. These mainly related to a paradigmatic shift in the “zeitgeist” related to the discourse around corporate responsibility and due diligence. Under the new legal obligations, European companies are now obliged to know – and report about – what goes on in their supply chains as well as to be accountable for their suppliers. Likewise, they are required to take grievances seriously and to show due diligence in their reaction to that knowledge.  Moreover, the development of and discussions around the new regulation have also shaped debates and public discourse beyond European borders. Brazilian stakeholders, for example, have absorbed the EUDR in agri-food policy debates and had mixed views on the regulation with companies being more critical and civil society actors more welcoming towards it (Sondergaard and Dias de Sá 2023).

In sum, the EUDR is likely to highly influence debates on deforestation-free supply chains in the foreseeable future. It will not only affect companies but also producers and producer countries. To date, the effects especially in production landscapes and for forest-dependent communities and smallholder farmers remain very opaque. Therefore, it is highly relevant to examine not only the EUDR’s future environmental impacts but also its social outcomes in producer countries. Even though the EUDR closes some important loopholes that existed in previous legislation, like the European Timber Regulation (Köthke et al. 2023), substantial risks of supply chain leakage, displacement of deforestation, and exclusion of smallholder producers remain. Land system science and telecoupling research is well placed to conduct critical analysis on the EUDR effects and on how sustainable land use can be promoted in this new policy setting. 


1 However, the EUDR specifies that “no later than two years after that date of entry into force, the Commission should evaluate and, where appropriate, present a legislative proposal on, extending the scope of this Regulation to other natural ecosystems, including other land with high carbon stocks and with a high biodiversity value such as grasslands, peatlands and wetlands” (Article 29). 

References 

Brondizio, E. S., Andersson, K., de Castro, F., Futemma, C., Salk, C., Tengö, M., ... & Siani, S. M. (2021). Making place-based sustainability initiatives visible in the Brazilian Amazon. Current Opinion in Environmental Sustainability, 49, 66-78.

Gustafsson, M.T., Schilling‐Vacaflor, A. and Lenschow, A. (2023). The politics of supply chain regulations: Towards foreign corporate accountability in the area of human rights and the environment?. Regulation & Governance, 17, 853-869. 

Newig, J., Lenschow, A., Challies, E., Cotta, B., & Schilling-Vacaflor, A. (2019). What is governance in global telecoupling?. Ecology and Society, 24(3).

Köthke, M., Lippe, M., & Elsasser, P. (2023). Comparing the former EUTR and upcoming EUDR: Some implications for private sector and authorities. Forest Policy and Economics, 157, 103079.

Medina, G., Pereira, C., Ferreira, J., Berenguer, E., & Barlow, J. (2022). Searching for Novel Sustainability Initiatives in Amazonia. Sustainability, 14(16), 10299.

Meyfroidt, P., Börner, J., Garrett, R., Gardner, T., Godar, J., Kis-Katos, K., ... & Wunder, S. (2020). Focus on leakage and spillovers: informing land-use governance in a tele-coupled world. Environmental Research Letters, 15(9), 090202.

Moffette, F., & Gibbs, H. K. (2021). Agricultural displacement and deforestation leakage in the Brazilian Legal Amazon. Land Economics, 97(1), 155-179.

Russo Lopes, G., & Bastos Lima, M. G. (2022). Understanding deforestation lock-in: Insights from Land Reform settlements in the Brazilian Amazon. Frontiers in Forests and Global Change, 5, 951290.

Russo Lopes, G., Bastos Lima, M. G. , & dos Reis, T. N. (2021). Maldevelopment revisited: Inclusiveness and social impacts of soy expansion over Brazil’s Cerrado in Matopiba. World Development, 139, 105316.

Schilling-Vacaflor, A., B. Cotta, A. Lenschow, J. Newig, E. Challies, M.-T. Gustafsson, N. Soendergaard & Inoue, C. (2022). Regulatory interactions between transnational sustainability governance and domestic politics in a context of policy dismantling: The case of soy and beef from Brazil. International Workshops on Public Policy, International Public Policy Association (IPPA), Budapest. 

Sondergaard, N. and Dias de Sá, C. (2023). Brazilian stakeholder assessment of the European Deforestation Regulation. Agricultural Policies in Debate. São Paulo, Agricultural Policy Dialogue Brasil-Alemanha. 

Villoria, N., Garrett, R., Gollnow, F., & Carlson, K. (2022). Leakage does not fully offset soy supply-chain efforts to reduce deforestation in Brazil. Nature Communications, 13(1), 5476.

Zhunusova, E., Ahimbisibwe, V., Sadeghi, A., Toledo-Aceves, T., Kabwe, G., & Günter, S. (2022). Potential impacts of the proposed EU regulation on deforestation-free supply chains on smallholders, indigenous peoples, and local communities in producer countries outside the EU. Forest Policy and Economics, 143, 102817.

Photo by Jeremy Stewardson on Unsplash