European Parliament’s recommendations on deforestation and sustainable corporate governance: complementary yet with necessary differences

The briefing examines two European Parliament reports: the Deforestation Report and the Corporate Governance Report. It argues that while both utilize due diligence, they serve different purposes—one being product-specific for forest-risk commodities and the other being a horizontal framework for all large undertakings. The author contends that these two approaches are complementary and that deforestation should be included as an adverse environmental impact in the horizontal corporate due diligence proposal to cover sectors not captured by the product-specific rules.

• The Deforestation Report identifies a minimum list of FERCs that should be covered, including palm oil, soy, meat, leather, cocoa, coffee, rubber, and maize, as well as their derived or containing products.
• The Corporate Governance Report proposes a horizontal due diligence tool applicable to all large undertakings, all publicly-listed small and medium-sized undertakings, and high-risk small and medium-sized undertakings, including those established outside the EU selling in the internal market.
• The Corporate Governance Report focuses on preventing and addressing adverse impacts on human rights, the environment, and good governance (including corruption and bribery) across a company's entire value chain, rather than restricting specific commodities.
• Both reports share common recommendations for the implementation of due diligence, specifically the necessity of stakeholder engagement, increased corporate transparency and reporting, the creation of administrative enforcement bodies, penalty regimes, and civil liability regimes to provide victims with legal remedies.
• The two reports are complementary because a horizontal framework establishes general requirements for all businesses, while product-based rules address heightened risks in specific sectors, such as those identified in the Deforestation Report.
• ClientEarth argues that deforestation must be included as an adverse environmental impact within the horizontal corporate due diligence proposal to ensure that companies in sectors not covered by the product-based rules (such as mining) still investigate and avoid deforestation risks in their value chains.

APA

Henriot, C., & Rice, M. (2021). European Parliament’s recommendations on deforestation and sustainable corporate governance: complementary yet with necessary differences. ClientEarth. https://www.clientearth.org/media/ianmdps4/european-parliament-s-inl-reports-on-deforestation-and-sustainable-corporate-governance-complementary-yet-different.pdf

Chicago

Henriot, Clotilde, and Michael Rice. European Parliament’s recommendations on deforestation and sustainable corporate governance: complementary yet with necessary differences. ClientEarth, 2021. https://www.clientearth.org/media/ianmdps4/european-parliament-s-inl-reports-on-deforestation-and-sustainable-corporate-governance-complementary-yet-different.pdf.

Wikipedia

{{cite report |last1=Henriot |first1=Clotilde |last2=Rice |first2=Michael |title=European Parliament’s recommendations on deforestation and sustainable corporate governance: complementary yet with necessary differences |publisher=ClientEarth |date=May 2021 |url=https://www.clientearth.org/media/ianmdps4/european-parliament-s-inl-reports-on-deforestation-and-sustainable-corporate-governance-complementary-yet-different.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{henriot2021european, author = {Henriot, Clotilde and Rice, Michael}, title = {{European Parliament’s recommendations on deforestation and sustainable corporate governance: complementary yet with necessary differences}}, institution = {ClientEarth}, year = {2021}, month = may, url = {https://www.clientearth.org/media/ianmdps4/european-parliament-s-inl-reports-on-deforestation-and-sustainable-corporate-governance-complementary-yet-different.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }