As the physical retail industry gradually gets back on its feet, a new logistical challenge lurks on the horizon. The delayed Environment Bill has once again been confirmed as part of the Government’s legislative programme in the recent Queen’s Speech.
Background to the Environment Bill
In August 2020, the Government revealed plans for new legislation that would seek to protect rainforests and clean up supply chains by prohibiting businesses operating in the UK from using products grown on land that was deforested illegally. This legislation is currently set out in the Government’s Environment Bill, which is due to be debated in the report stage in the House of Commons on 26 May 2021. Whilst the Government has indicated it will be making several amendments to the Bill during the report stage, we are able to glean from the current iteration of the Bill some of the requirements that will be imposed on businesses in the future.
According to the Bill, businesses will be required to implement due diligence systems where ‘forest risk commodities’ are used by ‘regulated persons’ in relation to UK commercial activities. To put it simply, businesses who rely on the use of certain commodities (or products derived from those commodities) for their trade will be required to account for where those commodities have originated from and to confirm that that those commodities have been produced in line with local laws protecting forests and other natural ecosystems. Whilst the definition of what constitutes a ‘forest risk commodity’ has not been revealed as of yet, it is anticipated that it will include commodities such as beef, cocoa, leather, palm oil, pulp and paper, timber, rubber and soya.
The current drafting of the Bill indicates that the due diligence system will require businesses to identify information about the commodity, assess the risk that relevant local laws were not complied with in relation to that commodity and to mitigate that risk. The business will then be required to provide the relevant authority with a report on the actions taken by it to establish and implement a due diligence system in relation to the commodities that are being used for their commercial activities.
What does this mean for retailers?
Although the Environment Bill is not expected to come into force for a while yet, retailers will need to start preparing and identify products which may use potentially at-risk commodities. The current drafting of the Bill indicates the onus will very much be on retailers to ensure that their products for sale in the UK meet the necessary requirements and therefore an in-depth review of supply chains may be in order.
Whilst there are likely to be exemptions to the requirements (if certain criteria are met), there will also be sanctions, both civil and criminal, for non-compliance with the requirements. As the world becomes ever more environmentally conscious, there will also be potentially damaging reputational issues for retail brands who fall foul of the requirements.
The proposed legislation makes clear that illegally produced commodities have no place in the UK market, as we build back greener from coronavirus.