The European Union (EU) says new laws should prevent companies selling products linked to deforestation.

The EU has passed a new law that applies to soy, beef, palm oil, wood, cocoa and coffee, and some derived products including leather, chocolate and furniture, as well as rubber, charcoal and some palm oil derivatives.

The law requires companies to produce due diligence statements proving that their supply chains are not contributing to the destruction of forests before they can sell goods to EU member states.

Fines of up to four per cent of a company's turnover in an EU country are on the table for those that do not comply. 

Deforestation is a major source of greenhouse gas emissions that drive climate change.

“I hope that this innovative regulation will give impetus to the protection of forests around the globe and inspire other countries at the COP15,” the European Parliament's lead negotiator Christophe Hansen said this week.

The legislation is to be formally approved by EU members and the parliament, and can enter into force 20 days later. Some of the rules come into force for just 18 months.

EU member states will be required to run compliance checks on at least 9 per cent of companies exporting from countries with a high risk of deforestation, 3 per cent from standard-risk and 1 per cent for low-risk.