British Government aims to forbid import of commodities from deforested areas as a consequence of international discussions focused on ESG.

In 2019, the British Government hired the independent consultancy 'Global Resource Initiative' ("GRI") to evaluate actions to ensure a more sustainable economy for the United Kingdom. 

As a result, GRI prepared a report with several recommendations, amongst which we highlight: 

• Development of an action plan for commodities introduced into the UK market until the end of 2020;

• Enactment of specific rules with the inclusion of penalties to avoid the use of commodities produced in deforested areas;

• The obligation of preliminary due diligence for commodities introduced on the UK market, to guarantee their respective environmental compliance;

• Development of a favorable economic scenario for the importation of sustainable commodities.

The executive summary is available here.  

In August 2020, motivated by international environmental discussions focusing on ESG, wildfires, deforestation and product traceability, the British Government published a public consultation regarding reduction of deforestation in UK supply chains through the development of a new environmental rule ("Public Consultation"). 

According to the British Government, 99% of the opinions (approximately 64,800 responses) received during the Public Consultation process agreed with the development of a new environmental rule aiming to reduce deforestation in the production chain of goods sold in the UK. 

In response to the GRI recommendations and the Public Consultation, the British Government has announced that it intends to present an amendment to the Environmental Bill with mechanisms to prohibit the import of non-sustainable commodities. Non-compliance with such future obligations will subject violators to administrative and civil penalties. Exporting and importing companies will need to prove that they know the origin of the commodities and that they were in compliance with the environmental rules in force at the country of origin. 

Once such new rule is effective, Brazilian companies that export commodities or products made from the commodities to the UK will have to prove their compliance with Brazilian environmental laws. This traceability system with environmental governance has been widely discussed in recent months considering the ESG environmental criteria. 

We recommend that our clients that export to the UK commodities or products based on commodities start their environmental governance process as soon as possible. 

Veirano's environmental and foreign trade teams are highly experienced on the subject and are available to provide further clarification.