Failure to comply could result in fines of up to 4% of a company's turnover in an EU country.

The law proposed by the European Union's executive body sets mandatory due diligence rules for importers into the EU of soy, beef, palm oil, wood, cocoa and coffee, and some derived products including leather, chocolate and furniture.

Many European companies operate in countries where environmental abuses are rife, but there is currently no EU-wide requirement for them to find and fix risks to the environment in their global supply chains.

Emissions from the land-use sector, most of which are caused by deforestation, are the second major cause of climate change after the burning of fossil fuels, and world leaders agreed at this month's COP26 summit to end deforestation by 2030.

"To succeed in the global fight against the climate and biodiversity crises we must take the responsibility to act at home as well as abroad," EU climate policy chief Frans Timmermans said.

"Our deforestation regulation answers citizens’ calls to minimise the European contribution to deforestation."

If the law is approved by EU governments and the European parliament, companies operating in the 27-nation EU will have to show the commodities specified were produced in accordance with the laws of the producing country.

They will also have to show the commodities were not grown on any land deforested or degraded after Dec. 31, 2020, even if it is legal to produce there according to producing country law.

"The deforestation regulations we are putting on the table are the most ambitious legislative attempts to tackle these issues worldwide ever," said EU environment commissioner Virginijus Sinkevičius.

The Commission hopes the law will be passed by 2023, with large companies given a 12-month grace period to comply and smaller ones a 24-month grace period.

'MAJOR LEAP FORWARD'

The European Commission proposed the law be reviewed and updated regularly, making it possible to add other commodities and products.

"The EU draft anti-deforestation law represents a major leap forward in the fight to protect the world’s endangered forests," said Nico Muzi, Europe Director of environmental group Mighty Earth.

But he said the law needs strengthening as it leaves out natural ecosystems such as savannahs, wetlands and peatlands and fails to target rubber, which poses a big risk to forests.

The proposed law will require companies in the EU to collect geographic coordinates showing where commodities they buy were produced, and to monitor these locations for forest loss via satellite images. read more

Nicole Polsterer, campaigner at NGO Fern, welcomed the law but added: "While today is a big step forward, the drivers of deforestation will remain as long as other markets exist for these tainted goods."

From 1990 to 2020, the world lost 420 million hectares of forest, according to the United Nations' Food and Agriculture Organization.