UK proposes deforestation due diligence for firms over £1 million revenue

The UK government launched a consultation on Nov. 12 into proposed mandatory due diligence rules that would require companies using deforestation-linked commodities to assess their supply chains and show they are not driving illegal deforestation.

The rules would apply to companies with annual global revenues above £1 million that use the commodities or products derived from them, ESG Today reported. In-scope commodities would include coffee, cocoa, cattle, soy, oil palm, rubber and timber, the same categories covered by the EU's Deforestation Regulation.

For allocators, the immediate task is a scoping pass on supply-chain documentation, not a divestment screen on holdings. A portfolio company with more than £1 million in global revenue that uses an in-scope commodity would need geolocation data as evidence of origin and a system for reducing identified risk of non-compliance to a negligible level. Because the EU regulation covers the same commodity categories, much of that documentation could be reused if the UK's final requirements stay aligned.

The proposal is modelled on the EU rules but omits the prohibition. It would not yet ban commodities that are not deforestation-free, although the government said it wants to move to a deforestation-free standard in future.

The government said UK consumption of goods linked to internationally traded commodities is associated with roughly 29,000 hectares of deforestation a year and 9.4 million tonnes of carbon emissions. Environment Secretary Dame Angela Eagle said: "British consumers want to feel confident that the everyday goods they buy are not driving devastating illegal deforestation abroad."

Annual reporting duties and enforcement, including monetary penalties, remain open in the consultation. Because the UK and EU regimes would remain separate even where their commodity lists match, firms may need to track compliance under two standards. The consultation runs to Jan. 17, 2027.