Manufacturers of chocolate and coffee, notably Mondelez and Italy's Lavazza, are concerned about the "practicalities" of a new European Union rule intended to combat deforestation.
Despite the companies and the larger coffee and cocoa industries' voluntary, public vows to clean up supply chains through audits conducted by outside organizations like Fairtrade, there has been a pushback, according to Reuters.
The bill, which was agreed upon in December, is anticipated to go into effect at the end of 2024.
Manufacturers Seek More Advice on the Deforestation Law
Coffee, cocoa, cattle, soy, rubber, and palm oil importers must demonstrate that their supply chains aren't causing the loss of forests, a factor in climate change, or they risk a fine of up to 4 percent of their bloc-wide revenue.
Last month, a number of significant investors were considering leaving consumer goods manufacturers with "risky" supply chains because of their exposure to the problem.
Lavazza pointed out that there are many intermediates in the coffee industry, making it difficult for the EU regulations to be implemented without additional advice.
The Answer to Failed Voluntary Agreements
The EU claims that the failure of years of voluntary agreements by food firms to clean up their supply chains of environmental impacts to have had a significant impact on the ground drove it to draft its landmark deforestation rule.
According to non-profit groups like Earthsight, Fern, and Solidaridad, the law mainly demands businesses to carry out their voluntarily-made commitments to discontinue sourcing from deforested areas.
According to several businesses, the rule as written could impede Europe's food supply system. Van de Put remarked, "I don't think that's what they're searching for.
For farmers to increase agricultural yields and prevent clearing forests to grow more cocoa plants, he urged better training.
This spring, Mondelez and representatives of a trade association studying the effects of the cocoa sector on forestry met with the EU Commission to discuss the regulation, an executive said. The goal of Mondelez's program to obtain all of its cocoa from farms by 2025 is to minimize deforestation.
Ferrero, an Italian confectionery company, requests that the EU issue detailed guidelines on compliance for each product because of the wide variations in supply chains.
The burning of fossil fuels is the primary driver of climate change, but deforestation is a close second. A number of prominent investors are still unwavering in their support for the regulation.
The EU Deforestation Law
The EU has adopted a new law that aims to reduce deforestation and forest degradation linked to the production of commodities imported into the bloc. The law, which entered into force on June 29, 2023, requires companies that place certain commodities on the EU market to ensure that they have not been produced on land that has been deforested or degraded since December 31, 2020.
The commodities covered by the law include beef, palm oil, soy, wood, cocoa, coffee, and rubber. The law also applies to derived products made from these commodities, such as leather, chocolate, and furniture.
Companies that fail to comply with the law could face fines of up to EUR 100 million or 0.1 percent of their global turnover, whichever is greater.
The EU's deforestation law is a significant step forward in the fight against deforestation. However, it has been met with some criticism from industry groups, who argue that it is too complex and expensive to implement.
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