How Cargill can help you understand the impact of new EU regulations on your business
December 15, 2021
The EU Commission is developing two significant pieces of legislation that will impact the global operations of food and agricultural companies doing business in the EU. This is part of its work to drive progress on environmental and social indicators, and harmonize the national standards of various member states.
We want to share a bit about how these policy proposals will affect cocoa and chocolate supply chains and what we are doing to help make it as simple as possible for our customers to comply with them as they likely enter into force over the next few years.
The regulation will prohibit the import and export of commodities and products into and out of the EU market that are associated with both legal and illegal deforestation. Its scope would include both cocoa beans and derived products, including chocolate. The proposal would have requirements to show due diligence by demonstrating that cocoa was not grown on land that was deforested after Dec. 31, 2020.
The second policy proposal – now expected to be released in February 2022 – deals with mandatory due diligence and corporate sustainable governance around environment, social and governance (ESG) issues.
It is expected to cover all sectors and companies, applying across all company operations (even those outside the EU), and up and down the supply chain as well. It will introduce compliance and reporting obligations, new directors’ duties, and address forced labor. It will also require internal due diligence processes based on U.N. and OECD guidelines for business and human rights.
To make it easier for companies to report in a standardized way on both policy proposals, the EU has also set a new Corporate Sustainability Reporting Directive that requires companies to disclose publicly how they operate and manage social and environmental risks.
What we are doing – and how we can help our customers
Cargill welcomes the proposed policies. We believe that greater transparency supported by a broad enabling environment in producing countries will accelerate the efforts to date by companies and drive positive transformation for the cocoa sector. And yet we also want to make sure that the full set of social and environmental risks are taken into account to avoid unintended consequences. We believe that engagement and dialogue between the EU and producing country governments will be crucial and that broad capacity-building on the ground will be required.
We have been participating in the public discussion around these policy proposals for several years. For example, we are actively participating in the EU Cocoa Talks and engaging in public consultations via our Government Relations team and our industry associations such as the European Cocoa Association (ECA) in order to advance the sector’s transformation.
At the same time, we are updating our portfolio of solutions to help our customers stay ahead of the curve as they become law. For instance, our Promise Solutions can support customers to respond to these policy changes while helping to improve the livelihoods of cocoa-growing households.
We also have been taking action for years to contribute to the intended outcomes of the legislation. This includes:
- Driving toward our corporate commitment to end deforestation in our supply chains by investing in cutting-edge tools that enable farm mapping, first-mile traceability and data-driven customer reporting, accessible via our CocoaWise™ Portal
- Supporting human rights and working to address child labor in cocoa supply chains through our Child Labor Monitoring and Remediation System
- Demanding our suppliers abide by the same principles and high standards that we adhere to ourselves, in the form of our Supplier Code of Conduct
You can see more about our progress as an entire company toward targets for our key sustainability priorities on the relaunched sustainability section of Cargill.com, including our new ESG scorecard and our reporting hub.
And you can read this fact sheet to learn more about these policy proposals and contact your Cargill representative to have a conversation about what it means for you.