EUROPEAN COMMISSION Brussels, 23.7.2019 SWD(2019) 307 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS



Stepping up EU Action to Protect and Restore the World's Forests



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A.Synopsis report of consultation results and feedback 1.Introduction The idea of a new EU initiative against deforestation and forest degradation was mooted in both the 2013 EU Forest Strategy and the 7th Environmental Action Programme . Between 2013 and 2019, the Commission consulted widely with various stakeholders including the general public, public authorities, academia, environmental non-governmental organisations, businesses and the industry, certification bodies and others, including from third countries on the subject. This document summarizes the inputs received from three studies (respectively released in 2013, 2017, 2018) , two conferences (2014, 2017) , and an open public consultation (2019). 2.Strengthening the knowledge base and consulting stakeholders Study on the impact of EU consumption on deforestation (2013) As part of its strategy to address climate change and global biodiversity loss, the European Commission launched a comprehensive study to assess the impact of EU consumption on forest loss at a global scale in 2011. The study, carried out over a two year period, was published in 2013. Part 1 of the study provided a comprehensive analysis of the impact of EU consumption on embodied direct deforestation. It found that the majority of crops and livestock products associated with deforestation were consumed at local or regional level. Of the portion of the embodied direct that is traded internationally, between 1990-2008 the EU 27 imported and consumed 36% of crops and livestock products associated with direct deforestation in the countries of origin. This translated into a deforested land area of 7.3 million ha per annum over the same period. Part 2 of the study identified critical areas where existing EU policies and legislation could be reviewed to reduce the effect on third country deforestation, which included climate and renewable energy policy, the Common Agricultural Policy, the Forest Strategy, the Biodiversity Strategy 2020, sustainable production and consumption policy, trade policy, investment policy, development cooperation policy, and research and innovation policy. The third part of the study proposed specific EU actions and measures, including other initiatives for further consideration. These included regulatory measures, voluntary measures, market-based instruments, information and awareness raising, funding mechanisms, capacity building and technical assistance. The identified options were assessed and ranked according to evaluation criteria. The study served as an important input to strengthen the knowledge base and better understand the EU’s impact on deforestation in the process of developing an EU initiative. Conference on the Challenges of Deforestation and Forest Degradation in the context of Climate Change, Development and Biodiversity Loss (2014) On 26 and 27 May 2014, the Commission organised a conference on the challenges of deforestation and forest degradation in the context of climate change, development and biodiversity loss. The conference aimed at launching a broad consultation process both inside and outside the EU to address deforestation and inform the development of future strategies. It was structured around four topics: i) Planet, ii) Business, iii) People, livelihood and ecosystems, and iv) The way forward. More than 120 representatives of EU Member States, third countries, international organisations, private sector, NGOs and research organisations attended. The conference found that while there is no quick fix to address the challenges of deforestation and forest degradation, and broad and comprehensive approaches are needed, some existing EU initiatives could serve as a basis for future action. The EU Action Plan on Forest Law Enforcement Governance and Trade (FLEGT Action Plan), the EU Biodiversity Strategy 2020, sustainable production and consumption policies and other initiatives in which the EU is involved, such as Reducing Emissions from Deforestation and forest Degradation (REDD+), are important examples. Other instruments such as the responsible sourcing of minerals from conflict areas, international negotiations on the post 2015 development area and the development of the Sustainable Development Goals were also highlighted. The conference closed with a call for action at both individual and collective levels, addressed to all stakeholders at all governance levels, including beyond the EU. Conference on tackling deforestation and illegal logging: progress made and opportunities for future action (2017) From 21 to 23 June 2017, the Commission invited stakeholders to take stock of progress, achievements and challenges as well as to explore opportunities for improving implementation of the FLEGT Action Plan and exploring further EU action against deforestation. More than 250 participants from producer and consumer countries, the private sector, civil society, indigenous and local communities, EU Member States and international organisations attended the conference. The first part of the conference focused on illegal logging, in particular the state of play of implementation of the FLEGT Action Plan. The second part of the conference collected further input on how to strengthen EU action against deforestation, notably by stepping up action on agricultural commodities, which are the major drivers of deforestation. As a follow up to the study on the impact of EU consumption on deforestation in 2013, the Commission launched a study to assess the feasibility of options to step up EU action against deforestation in 2016. The contractor presented the preliminary findings of the study, and three break out groups discussed potential demand-side, supply-side and investment & finance measures. The conference also served as an opportunity to inform the discussion and gather input in view of future developments. In closing the conference, it was felt that there is a strong case for an EU action plan on deforestation where different options for different contexts are considered and a comprehensive approach is taken. Feasibility study on options to step up EU action against deforestation (2018)

In 2018, the Commission published the outcomes of the study on the feasibility of options to step up EU action to combat deforestation and forest degradation launched in 2016. The study on the feasibility of options to step up EU action to combat deforestation and forest degradation reviewed relevant EU policies, legislation and initiatives as well as ongoing international and regional efforts by the private sector, governments and civil society. It made suggestions on the framing of possible EU action to tackle deforestation as well as its root causes and drivers. The study proposed a range of potential EU interventions that would tackle the different drivers and dimension of the problem of deforestation and forest degradation (supply and demand side drivers, as well as the role of finance & investments). The identified interventions were assessed against a shared set of assessment criteria, which included feasibility and effectiveness, political acceptability, technical complexity, and administrative costs. A key conclusion of the study was that given the complexity of the problem, any potential EU initiative should consider a package of interventions that addresses the supply, demand and finance dimensions, building on and reinforcing existing EU action as well as government and private sector commitments on zero deforestation and other relevant international initiatives. Study on the environmental impact of palm oil consumption and on existing sustainability standards (2018) The Commission also released in 2018 the report of a study on the environmental impact of palm oil consumption and on existing palm oil sustainability standards with view to strengthening the knowledge base on the subject. In assessing the role and potential of existing palm oil sustainability certification schemes, the study concluded that the four main oil palm certification schemes (RSPO, ISCC, MSPO, ISPO) differ considerably in terms of their requirements, performance, market uptake and transparency. Inconsistency in their implementation and enforcements were also found. None of the schemes were found to cover all of the environmental and social issues included in EU and UN policy objectives. Besides these four main certification schemes, several voluntary initiatives and commitments related to palm oil and driven by NGOs, the public or the private sector were assessed. An evaluation of existing legislation and enforcement regimes affecting the sustainability of palm oil showed that while most producer countries have introduced environmental and social regulations relating to palm oil, their enforcement is often selective, incomplete or ineffective. Open public consultation (2019) From 14 January 2019 until 25 February 2019, the Commission published an open public consultation through EU survey to collect the views of all interested stakeholders on the problem of deforestation and forest degradation, and how the EU can address it. The consultation received 955 replies. Most respondents to the survey answered as private EU-citizens (61%), with the next largest respondent categories being NGOs (10%), and businesses (7%). Almost all respondents (98%) considered the problem of deforestation and forest degradation to be an alarming or serious threat. However, the degrees of perceived severity of the problem varied to some extent across different stakeholder groups. For instance, non-governmental organisations and EU farmers found the problem much more alarming than companies and business organisations. At the same time, most respondents (73%) considered the current EU policy and legislative framework inadequate for tackling deforestation and degradation. While it was mostly EU citizens, followed by NGOs and companies, that considered the current EU framework to be inadequate, at least 50% of all stakeholder groups agreed. The main reasons to address deforestation and forest degradation were protecting biodiversity, ecosystems and their services according to 92% of all respondents followed by mitigation and adaptation measures for climate change (80%). Respondents considered the most important direct drivers of deforestation and forest degradation to be the expansion of large-scale commercial agriculture (93%), followed by industrial logging/industrial forest products extraction (83%), and illegal logging (81%). Among the indirect drivers, more than 90% of the respondents perceived weak forest protection law and adequate enforcement as the most important, followed by weak governance of land and weak enforcement of law (92%). Poor forest and land management practices were also considered as a very important driver by 85% of the respondents, followed by the high consumption levels of commodities associated with deforestation and forest degradation together with increasing demand for these commodities due to population growth and increasing standards of living (83%). When asked about which commodities associated with deforestation and forest degradation should be addressed by an EU initiative, 80% of all respondents considered palm oil, followed by meat (54%), soy (53%), wood (52%) and bio-diesel (45%). 3.Stepping up EU action against deforestation and forest degradation The studies, conferences and the open public consultation have shown that in particular five priorities are of particular relevance when tackling the problem of deforestation and forest degradation. These involve actions on the demand-side, supply-side, multilateral and bilateral cooperation, finance and investment, and research and innovation (including monitoring and transparency). The input provided by stakeholders is summarized below. Priority 1: Leveraging EU demand for commodities from deforestation-free supply chains Participants at the conferences stressed that demand-side action had the strongest potential to deliver on the EU’s international commitments and ensure sustainable supply practices. Of the proposed demand-side measures in the open public consultation, 91% of the respondents considered addressing EU consumption of unsustainably produced commodities associated with deforestation and forest degradation as very important or important. 88% of the respondents even considered the discouragement of the consumption of unsustainable and non-deforestation-free products as a very important or important action. Many respondents also requested the promotion of healthy diets including less meat consumption. Participants at the 2017 conference also stressed the need to encourage lower consumption of food products associated with deforestation and forest degradation, including in the context of the Common Agriculture Policy.

Participants at both conferences highlighted lack of transparency and traceability in the supply chain to verify third party commitments as an issue. In this process, existing transparency initiatives should be promoted. Similarly, 88% of respondents to the open public consultation indicated that the consumption of sustainable and deforestation-free products through improved transparency and information would be a very important or important action. At the conferences, participants stressed that consumers need better access to information in order to address the production of unsustainably produced commodities. They proposed to establish a platform for regular dialogue between producers, buyers, monitoring- and enforcement bodies on progress and issues, and to seek solutions. Furthermore, 83% of respondents to the open public consultation considered actions to better implement, coordinate and communicate actions in EU Member States as very important or important. 87% of all respondents strongly supported initiatives to promote sustainable and deforestation-free products on the EU market. Both participants at the conferences and respondents to the open public consultation called on the EU to establish a regulatory framework to ensure deforestation-free supply chains. It was also suggested that forest-specific requirements should be included in EU trade and investment agreements, and that due diligence approaches should be promoted for companies, including the banking and finance sector, to address environmental and social concerns. It was suggested to build on existing initiatives and lessons learnt from the timber and forestry sector (such as FLEGT Voluntary Partnership Agreements and the EU Timber Regulation). 62% of all respondents considered encouraging the use of voluntary certification to be a very important or important action. Nonetheless, at the conferences, participants expressed concerns about the weaknesses and limits of certification schemes, such as weak auditing and monitoring processes, and the absence of compliance bodies. It was also stressed that different approaches are needed for different commodities and that these need to be complemented by government, jurisdictional and policy support to help achieve results. There was a convergence of views between NGOs calling for a transformation of the mainstream market, where as the private sector focussed more on high sustainability standards for niche markets. While both respondents to the public consultation and participants at the conferences called for more robust and mandatory certification schemes, it was also argued that these schemes will not be sufficient to reduce deforestation rates significantly and should be complemented by other actions. At the 2017 conference, it was also stated that the private sector should be seen as part of the solution, and ongoing efforts and commitments should be recognized. Similarly, 85% of respondents to the questionnaire indicated that support to deforestation commitments and national dialogues on deforestation-free commodities are very important or important. 89% of all respondents to the public consultation rated better integration of deforestation and forest degradation considerations through relevant public policies, such as public procurement and corporate social responsibility, as very important or important. Participants at the conferences also stressed the need for monitoring implementation of public procurement policies and the essential role of governments in changing their own procurement policies towards deforestation-free supply chains. Participants at the 2017 conference also discussed the interplay between deforestation and the EU policy on biofuels, as well as possible measures to decouple biofuels production from deforestation. Some respondents to the public consultation also proposed to reduce the import of soy-based animal feeds into the EU. Priority 2: Strengthening partnerships with producing countries to reduce pressure on forests Regarding potential supply-side actions, 91% of the respondents to the public consultation strongly supported working in partnership with producer countries to increase the share of sustainably produced commodities. Similarly, experts at the 2014 and 2017 conferences stressed that the EU should work in partnership with commodity producer countries through for example political dialogue, cooperation, partnership instruments, free trade agreements etc. Some participants at the conferences stressed the importance of recognizing producer countries’ needs to use forest resources for their future development. 92% of the respondents to the public consultation considered support to the uptake of sustainable and deforestation-free practices by stakeholders in tropical forest countries as very important or important. This was also stressed at the conferences, where participants called for a policy package for phasing out illegally produced agricultural commodities along with the need to increase productivity and promote sustainable agricultural intensification. Participants at the conferences also highlighted the important role of small-scale forest and farm producers, who represent by far the largest private sector group but are often overlooked by global initiatives, national policies, development funding and the large industrial scale private sector. It was stressed that the EU should provide better market access and opportunities as incentives for sustainably produced commodities. Participants at the conferences stated that, as one of the main importers of commodities associated with deforestation, the EU ought to provide more financial and technical assistance to producer countries to protect and restore forests and support livelihoods of local and indigenous communities. The important role of communities in protecting forests and the risk of neglecting forest degradation, ecosystem fragmentation and land grabbing was also highlighted. Several speakers at the conferences also stressed the issue of land-use planning, insecure tenure and more effective land governance. In this context, the need to work at jurisdictional level where land use decisions are taken was also emphasized. At the same time, the limitations of these approaches were also discussed, as tenure issues cannot always be addressed at jurisdictional level and there may be risks of leakage across borders to other jurisdictions. The results of the open public consultation showed that 94% of the respondents supported the promotion of better forest protection and land use planning, governance and law enforcement. Participants at the conferences requested the EU to not only address supply chains but also forest protection and biodiversity conservation needs. Similarly, 95% of the respondents to the public consultation considered support to forest policies, sustainable forest management, better protection, conservation and restoration of ecosystems as very important or important. Priority 3: Strengthen multilateral and bilateral cooperation to halt deforestation and forest degradation 83% of the respondents to the public consultation considered working in partnership with other key consumer countries to step up action as very important or important. Speakers at the 2017 conference also emphasised the importance of stronger partnerships between the public and private sector. These partnerships should ensure transparency and accountability and should help stimulate private sector actions. The important role of international organisations and certification bodies, in particular those with a focus on agricultural and forest commodities associated with deforestation and forest degradation, was also stressed by the participants. 82% of the respondents to the public consultation supported working on an ambitious multilateral agreement that could focus on or integrate deforestation and forest degradation considerations into e.g. a Convention of the Parties. Several respondents also proposed to use the EU’s environmental diplomacy to improve international cooperation and work towards an international treaty with binding targets, as well as promote measures to avoid deforestation in other multilateral agreements. Free trade agreements were also mentioned as a tool to prevent trade in illegally sourced commodities. A majority of 95% of respondents to the public consultation considered the inclusion of deforestation and forest degradation measures in EU trade agreements signed with tropical countries as a very important or important action. Similarly, several participants at the conferences called on the EU to introduce forest-specific requirements in EU trade and investment agreements to underpin the EU’s international commitments and to mainstream deforestation considerations throughout EU policies. Some experts also suggested to increase trade tariffs or to attach sustainability criteria to the import of commodities associated with deforestation and forest degradation, and some argued for a complete import ban on those commodities. A number of respondents to the public consultation also proposed to make trade in these commodities conditional on rigorous forest protection measures. Priority 4: Redirecting finance in support of more sustainable land-use practices 80% of all respondents to the public consultation considered measures to increase of the sustainability, availability and access to finance (including to smallholders) as very important or important. Similarly, at the 2017 conference, it was stressed that besides the need to raise green finance, measures are also required to ensure that conventional investments do not have adverse impacts on deforestation and forest degradation. 89% of the respondents to the public consultation rated the action to increase sustainability and transparency in financing of high deforestation and forest degradation risk sectors as very important or important. At the 2017 conference, participants highlighted that the financial sector has a key role to play in eradicating deforestation from its activities but that it needed technical and regulatory support. It was suggested that the EU could help to identify and map financial sector actors and mechanisms, and set up a regulatory framework for the disclosure of investments that risk contributing to deforestation. The latter was supported by 87% of all respondents who considered measures to improve the disclosure of information on deforestation proofing in financial investments to be very important or important.