Cookies on Legislation.gov.uk

The cookies on legislation.gov.uk do two things: they remember any settings you've chosen so you don't have to choose them on every page, and they help us understand how people browse our website, so we can make improvements and fix problems. We need your consent to use some of these cookies.

Search Legislation

Advanced Search

Environment Act 2021

Contents

Schedule 17: Use of forest risk commodities in commercial activity

  1. Schedule 17 sets out new requirements on regulated persons using forest risk commodities in their UK commercial activities. Part 1 of the Schedule describes the new requirements and the persons they apply to, Part 2 contains enforcement provisions, and Part 3 contains a requirement to review the effectiveness of the Schedule, and definitions of terms in the Schedule.

Part 1: Requirements

  1. Part 1 of the Schedule contains restrictions on the use of forest risk commodities and requirements relating to due diligence and reporting. It also specifies how regulated persons will be determined, and how these persons could be exempt from the requirements.

Meaning of "forest risk commodity"

  1. Paragraph 1 outlines the meaning of "forest risk commodity". This captures agricultural commodities whose production is associated with wide-scale conversion of forest. Some examples of commodities likely to be considered for inclusion within this definition include beef, cocoa, leather, palm oil, rubber and soya. The Secretary of State will have the power to make regulations specifying the commodities to which the Part 1 requirements will apply. This means that commodities will be brought into scope at a later date by laying further secondary legislation.
  2. Sub-paragraph (2) requires that regulations bringing commodities into scope can only specify a commodity that has been produced from a plant, animal or other living organism (such as a fungus).
  3. Sub-paragraph (3) outlines that a commodity can only be specified in regulations if the Secretary of State considers that forest is being converted for the purposes of producing the commodity. Sub-paragraph (4) defines "forest" for the purposes set out in sub-paragraph (3).
  4. Sub-paragraph (5) outlines that the definition of "forest" in sub-paragraph (4) includes land that is wholly or partly submerged in water, for example in the case of mangrove forests. Submersion could be either temporary or permanent.
  5. Sub-paragraph (6) outlines that timber and timber products cannot be specified as regulated forest risk commodities. This is to avoid overlap with an existing environmental regime, Regulation (EU) No. 995/2010 of the European Parliament and of the Council of 20 October 2010, which lays down obligations on operators who place timber and timber products on the market.
  6. Sub-paragraph (7) requires the Secretary of State to consult before specifying which forest risk commodities will be in scope in regulations, and sub-paragraph (8) allows for this consultation requirement to be carried out before the requirements set out in Part 1 come into force.

Prohibition on using illegally produced commodities

  1. Paragraph 2 prohibits the use of regulated forest risk commodities, and products derived from forest risk commodities, in a regulated person’s UK commercial activity unless they were produced in compliance with relevant local laws.
  2. Sub-paragraph (3) defines "local law" as any law that has effect in the country or territory where the organism from which a forest risk commodity was produced was grown, raised or cultivated.
  3. Sub-paragraph (4) defines "relevant local law" as a local law which relates to land use or land ownership where the commodity was grown, raised or cultivated. A relevant local law would include, for example, a law designating an area as a national park in which agriculture is not allowed. The effect of this definition is that the commodity must be sourced from land that is legally occupied or used. The sub-paragraph also sets out that other laws that relate to that land can be specified by the Secretary of State through regulations. This means that the Secretary of State can add to the category of relevant local law if it relates to the land the commodity was produced on.
  4. Sub-paragraph (5) sets out that regulations adding to the categories of "relevant local law" may only specify local laws if they relate to the prevention of forests from being converted for agricultural use.
  5. Sub-paragraph (6) defines the "source organism" as the plant, animal, or living organism from which the forest risk commodity was produced. For example, the animal from which meat came from, or the plant or tree from which fruits were harvested.
  6. Sub-paragraphs (7) and (8) set out that the prohibition does not apply where the commodity is waste and is a renewable transport fuel that qualifies and may be issued with a Renewable Transport Fuel certificate. This is to avoid overlap with an existing environmental regime, the Renewable Transport Fuel Obligations Order 2007 (S.I. 2007/3072).

Due diligence system

  1. Paragraph 3 requires that regulated persons who use forest risk commodities in their UK commercial activities, or products derived from them, must set up and implement a due diligence system for the regulated commodities they use.
  2. Sub-paragraph (2) outlines the three components this due diligence system must include, which are:
    • identifying and obtaining information about the regulated commodity;
    • assessing the risk that the commodity was sourced from land that was illegally occupied or used; and
    • mitigating the risk.
  1. Sub-paragraph (3) allows the Secretary of State to make regulations containing further details on the due diligence system outlined in sub-paragraph (2)(a) to (c). This includes:
    • information that should be obtained;
    • the criteria for assessing the risk; and
    • ways to mitigate risks.

Annual report on due diligence system

  1. Paragraph 4 requires a regulated person who uses forest risk commodities in their UK commercial activities, or products derived from them, to provide a report on the actions taken in Paragraph 3 to establish and implement a due diligence system for the regulated commodity. Reports are to be provided for each annual reporting period.
  2. Sub-paragraph (2) requires the regulated person to provide their report within 6 months after the end of the reporting period, and no later than this.
  3. Sub-paragraph (3) allows the Secretary of State to make regulations containing details of the content and form of the report, and how they should be provided to the relevant authority.
  4. Sub-paragraph (4) requires the relevant authority to make reports from regulated persons under this paragraph available to the public. The extent and way in which these reports would be made public would be set out in regulations made by the Secretary of State.
  5. Sub-paragraph (5) defines the term "relevant authority" as the Secretary of State, or another person if the Secretary of State has specified that person to be the relevant authority in regulations.
  6. Sub-paragraph (6) defines the "reporting period" for the Schedule as the day in which the requirements come into force until the following 31 March, and then each successive period of 1 year after that. This means that the reporting period is the same as the UK’s financial year.

Exemption

  1. Paragraph 5 sets out that a regulated person can be exempt from the requirements set out in Paragraphs 2 to 4 in relation to their use of forest risk commodities in their UK commercial activities if the amount they use is below a weight or volume threshold. For example, a large processor of a food item may use a very small amount of a forest risk commodity as an ingredient to make up the food item. If, in aggregate, the total use of that commodity over the course of a year is below the threshold, they would be exempt. Sub-paragraph (1) sets out that regulated persons can only be exempt if they satisfy two conditions, as detailed below.
  2. Sub-paragraph (2) requires that in order to satisfy the first condition, a regulated person must give notice to the relevant authority before the start of a reporting period. The notice must contain a declaration that the person is satisfied they will not be using an amount of forest risk commodity during the reporting period that exceeds a prescribed weight or volume threshold, and other prescribed information.
  3. Sub-paragraph (3) requires that in order to satisfy the second condition, the regulated person must not use an amount of the commodity in their UK commercial activity during the period that exceeds the prescribed weight or volume threshold for that commodity.
  4. Sub-paragraph (4) sets out that the following sub-paragraphs (5) and (6) only apply in the scenario where a regulated person gives notice under sub-paragraph (2), but the amount of the forest risk commodity used in their UK commercial activities during the period exceeds the prescribed weight or volume threshold for that commodity.
  5. Sub-paragraph (5) outlines that if the regulated person gives a second notice to the relevant authority containing the prescribed information before the date at which their commodity use exceeds the threshold, the person is exempt from the Part 1 requirements from the start of the reporting period until the date this second notice is given.
  6. Sub-paragraph (6) outlines that if the regulated person does not give a second notice to the relevant authority before the date at which their commodity use exceeds the prescribed threshold, then they will not be exempt from the requirements in Part 1 of the Schedule for any part of the reporting period.
  7. Sub-paragraph (7) defines the terms "prescribed", "relevant date" and "relevant enforcement authority" used in this paragraph.
  8. Sub-paragraph (8) sets out that regulations made under this paragraph may set thresholds on the weight or volume of a forest risk commodity below which the exemption may apply. Regulations may also make provision about how the amount of forest risk commodity used in the threshold is to be determined.
  9. Sub-paragraph (9) requires the Secretary of State to consult with appropriate persons before making regulations under this paragraph (apart from regulations made under sub-paragraphs (2)(b) and (5)). Sub-paragraph (10) sets out that the consultation may be carried out before paragraph 5 comes into force.

Guidance

  1. Paragraph 6 sets out that the Secretary of State may issue guidance about the requirements in Part 1 to an enforcement authority, and if so, that the enforcement authority must take this into account when enforcing these measures.

Meaning of "regulated person"

  1. Paragraph 7 sets out the persons who will be subject to the requirements set out in Paragraphs 2 to 4 in Part 1 of this Schedule.
  2. Sub-paragraph (1) specifies that for the purposes of this Schedule a "regulated person" is an entity that carries out commercial activities in the UK in relation to a regulated forest risk commodity, and either exceeds a turnover threshold set by the Secretary of State for that commodity, or is a subsidiary of an undertaking that exceeds the turnover threshold for that commodity. This means that different turnover thresholds could be set for different forest risk commodities, and regulated persons will only be subject to the requirements for a particular forest risk commodity if they, or their parent company, exceed the relevant turnover threshold.
  3. Sub-paragraph (2) outlines that regulations under sub-paragraph (1) may make provision about how the turnover threshold will be determined for forest risk commodities, and sub-paragraph (3) requires that the Secretary of State must consult persons they consider appropriate before making these regulations. The requirement to consult may be carried out before the requirements come into force, as outlined in sub-paragraph (4).
  4. Sub-paragraph (5) sets out that regulations may make provision whereby a person who becomes a regulated person may, for a specified transition period after becoming a regulated person:
    • not have Part 1 requirements applied to them; or
    • have modified Part 1 requirements applied to them.
  1. Sub-paragraph (6) allows for the Secretary of State to specify in regulations that a group of undertakings may be treated as one regulated person instead of multiple regulated persons, in such circumstances and for such purposes as may be provided.
  2. Sub-paragraph (7) defines the terms "group" and "undertaking" for the purposes of paragraph 7 as those used in the Companies Act 2006.

Part 2: Enforcement

General power

  1. Paragraph 8 makes provision for the Secretary of State to make regulations for the enforcement of requirements made under Part 1, or imposed by regulations made under Part 1 of this Schedule.

Powers to confer functions

  1. Paragraph 9 allows for functions to be conferred on one or more enforcement authorities. Sub-paragraph (2) sets out that these functions may include the exercise of discretion, and that regulations may also provide for a person to be authorised to exercise functions on behalf of an enforcement authority.
  2. Sub-paragraph (3) makes provision for regulations to be made under Part 2 that require an enforcement authority to issue guidance about how it will exercise its functions, and requires them to consult with specified persons before issuing this guidance.

Monitoring compliance

  1. Paragraph 10 sets out that regulations made under Part 2 of this Schedule may include provisions for the enforcement authority to monitor compliance with the requirements set out in Part 1 of the Schedule.

Records and information

  1. Paragraph 11 sets out that regulations made under Part 2 of this Schedule may include provisions requiring regulated persons subject to the requirements in Part 1 to keep records. These regulations may also require regulated persons to provide records or information to an enforcement authority, and require the enforcement authority to provide reports or other information to the Secretary of State.

Powers of entry etc

  1. Paragraph 12 allows for regulations to confer on an enforcement authority powers of entry, inspection, examination, search and seizure. These powers are needed so that the enforcement authority is able to check that regulated businesses are complying with the law. For example, the enforcement authority may have reason to believe a company is using more of a regulated commodity than they stated when they gave notice for the purpose of using the exemption, and may wish to examine the premises to check if this is the case.
  2. Sub-paragraph (2) sets out that regulations may include provision for powers to be exercisable only if a warrant is issued, about applications for warrants, and about the execution of warrants.
  3. Sub-paragraph (3) sets out that warrants are needed in order to enter premises by force, to enter a private dwelling without the consent of the occupier, and to search and seize material.

Sanctions

  1. Paragraph 13 makes provision about the civil sanctions that can be applied where regulated persons fail to comply with requirements in Part 1, Part 2 regulations, or for their obstruction of or failure to assist an enforcement authority. It also makes provision for appeals against such sanctions.
  2. Sub-paragraph (2) sets out that regulations made under Part 2 must ensure that if a regulated person fails to comply with a requirement in paragraph 2(1) or (2) in relation to their use of forest risk commodities and derived products, but the enforcement authority is satisfied that the regulated person took all reasonable steps to implement a due diligence system for that commodity, then a civil sanction may not be imposed on the regulated person for their failure to comply.
  3. Sub-paragraph (3) outlines that regulations may include provisions creating criminal offences punishable with a fine if a regulated person fails to comply with civil sanctions that were imposed on them, or for the obstruction or failure to assist an enforcement authority.
  4. Sub-paragraph (4) defines "civil sanctions" for the purposes of this paragraph, and that these can include fixed monetary penalties, discretionary requirements, stop notices and enforcement undertakings.
  5. Paragraph 14 sets out that Part 2 regulations may include provision for imposing sanctions regardless of whether the conduct for which it was imposed is an offence, or if the enforcement authority is a regulator for the purposes of Part 3 of the Regulatory Enforcement and Sanctions Act 2008.

Charges

  1. Paragraph 15(a) specifies that regulations made under Part 2 of the Schedule may make provision for the payment of a charge on a regulated person to be used by the enforcement authority to recover the costs it incurred when performing its functions.
  2. Sub-paragraph (b) allows for regulations to make provision that authorise a court or tribunal to award costs incurred to the enforcement authority.

Consultation requirements

  1. Paragraph 16 requires the Secretary of State to consult with appropriate persons before making regulations under Part 2 of the Schedule. Sub-paragraph (2) sets out that the consultation may be carried out before this paragraph comes into force.

Part 3: General Provisions

Review

  1. Paragraph 17 makes provision for the Secretary of State to review the effectiveness of Part 1 and Part 2 of the Schedule.
  2. Sub-paragraph (2) sets out what the review must consider in particular. This includes:
    • the amount of forest being converted to agricultural use for producing commodities;
    • the impact of the Schedule on the amount of forest being converted to agricultural use for producing forest risk commodities;
    • the impact of the Schedule on the use of forest risk commodities, and their derived products, from being used in UK commercial activities where they were produced on land illegally occupied or used; and
    • any changes to relevant local laws in relation to forest risk commodities.
  1. Sub-paragraph (3) requires the Secretary of State to publish and lay before Parliament a report that contains the conclusions of the review, and the steps they intend to take to improve the effectiveness of the provisions, if any.
  2. Sub-paragraph (4) outlines that the review must be completed within the second and third anniversary of the Part 1 requirements coming into force. Sub-paragraph (5) states that subsequent reviews must be completed before the end of the two-year period since the previous review was completed. This means that reviews must be completed every two years beginning from when the requirements come into force.
  3. Sub-paragraph (6) set outs that the review is only completed once the Secretary of State has laid the report before Parliament and published it.

Interpretation

  1. Paragraph 18 defines the terms used in the Schedule.
  2. Sub-paragraph (2) explains the meaning of a product derived from a forest risk commodity. It includes any product of an animal that has been fed on a forest risk commodity.

Back to top