Upcoming EU ESG legislation and its impact on the food industry

In light of this, the European Union (EU) and its Member States have adopted measures to address the aforementioned issues. In this article, we provide an overview of the recent Environmental, Social, and Governance (ESG) provisions that are relevant for the food sector. This includes: the Regulation on Deforestation-free Supply Chains, the Corporate Sustainability Reporting Directive 2022/2464, and proposed Corporate Sustainable Due Diligence Directive; all EU ESG instruments that highly impact the entire food sector.

Regulation on Deforestation-free Supply Chains

Last December, the European Council and European Parliament reached an agreement about the Proposed Regulation on Deforest-free supply chains of 17 November 2021 (Regulation) by the European Commission. In short, this Regulation imposes further mandatory due diligence obligations to ensure that goods sold in the EU have not been produced on ‘deforested or degraded land’ anywhere in the world. This strengthened due diligence obligation means that operators and traders will have to prove that the products are both ‘deforestation-free’ (pursuant to the new text of the approved trialogue agreement of the said Regulation, ‘deforestation’ means: “the conversion of forest to agricultural use, whether human-induced or not) after 31 December 2020 and comply with all relevant applicable laws in force in the country of production. However, small operators can rely on due diligence declarations prepared by larger operators.

According to the European Commission:

“(…) all relevant companies will have to conduct strict due diligence if they place on the EU market, or export from it: palm oil, cattle, soy, coffee, cocoa, timber and rubber as well as derived products (such as beef, furniture, or chocolate). These commodities have been chosen on the basis of a thorough impact assessment identifying them as the main driver of deforestation due to agricultural expansion.”

Furthermore, companies will also be required to collect precise geographical information on the farmland…