Businesses falling within the scope of Schedule 17 have to report annually on the steps they have taken to establish and implement a due diligence system in relation to forest risk commodities and the minimisation of illegal deforestation.
This report must be given to the Secretary of State who will publish it in the way and to the extent specified in further regulation (still pending).
Due Diligence
Businesses have to establish and implement due diligence systems for forest risk commodities to minimise the risk of illegal deforestation.
This due diligence system only includes the following three steps:
(a) identifying, and obtaining information about, the commodity,
(b) assessing the risk that relevant local laws were not complied with in relation to the commodity, and
(c) mitigating that risk.
The Secretary of State still needs to adopt regulation which outlines which commodities are a “forest risk commodity”. Examples could be beef, leather, palm oil, rubber and soya.
The Secretary of State may by regulations make further provisions about due diligence including the information that should be obtained, the criteria to be used in assessing risks and the ways in which risks may be mitigated.
Other
There is a general prohibition for businesses to use illegally produced forest risk commodities. However, if all reasonable steps were undertaken to implement a due diligence system as outlined above, there are no sanctions for violating this prohibition.
Normative scope
Human Rights
Environment
Other social matters
Broad ranging
Schedule 17 requires compliance with relevant local laws. This includes local laws which
Relate to the ownership of the land on which the forest risk commodity is grown;
Relate to the use of that land;
Otherwise relate to that land and are specified in regulation by the Secretary of State (still pending).
The main aim of the provisions is to tackle illegal deforestation. The rights of indigenous people are not specifically addressed even though they are often affected by illegal deforestation. Their protection under Schedule 17 varies by country depending on what protection is granted to them as part of local landownership and land-usage laws.
Value chain scope
Own operations
Direct subsidiaries
Direct subsidiaries of businesses which fall within the scope of Schedule 17 automatically fall within its scope too and have to comply with all obligations under the schedule. The Secretary of State may adopt regulation specific for corporate groups.
Direct Suppliers
Indirect Suppliers
Schedule 17 addresses the deforestation issue directly at the beginning of a supply chain. Human rights and the environment are not considered for various other tiers of the supply chain.
Company scope
Large Companies
SMEs
The Schedule applies to persons (other than individuals) who carry on commercial activities in the UK, and
Meet a certain annual turnover threshold, or
Are a subsidiary of an organisation which meets the turnover requirement.
The Secretary of State still needs to adopt regulations specifying the turnover threshold.
Businesses can be exempt from the Schedule if they use less than the threshold amount of a forest risk commodity and notify the relevant authority to that extent. This threshold is still to be determined through regulation by the Secretary of State.
All sectors
The Schedule only applies to forest risk commodities. What they are still needs to be determined by the Secretary of State through new regulation. They could include beef, cocoa, leather, palm oil, rubber and soya.
Administrative enforcement
Monitoring
Administrative Sanctions
The Secretary of State may adopt regulations for enforcement. This includes monitoring compliance, powers of entry, and civil sanctions. No regulation has been adopted so far.
Judicial enforcement
Civil Liability
Access to Justice
Other
The Secretary of State may adopt regulation for criminal sanctions in the form of fines for the failure to comply with civil sanctions or failure to assist the enforcement authority. No regulation has been adopted so far
The 2021 Environment Act was passed in November 2021. Its adoption is particularly relevant in light of the UK leaving the EU and potential future divergence from EU regulation.
Schedule 17 of the Act deals with the use of forest risk commodities in commercial activities. It prohibits the use of forest risk commodities that were not produced in compliance with relevant local law. To do so, corporations have to establish a due diligence system and report back. Enforcement of schedule 17 is dependent on the adoption of secondary regulation by the Secretary of State, in this case, of the Department for Environment, Food and Rural Affairs (“DEFRA). To date (May 2023), no secondary legislation has been adopted yet.
Aside from the required regulation for implementation still missing, schedule 17 is also critiqued for its reliance on compliance with local laws. Local laws do not necessarily offer sufficient protection against deforestation. Moreover, there is no explicit mention of the rights of indigenous people.
Upcoming Amendments and Official Reviews:
Following the adoption of the Environment Act, a public consultation was held from December 2021 until March 2022 to discuss the secondary regulation needed to implement the due diligence requirements. Viewpoints on the following elements were sought:
Scope of commodities falling within the regulation;
Scope of businesses subject to the provision;
What due diligence and the reporting on due diligence should entail; and