Update on Deforestation Regulation and Its Implications
Date published:
The European Commission has confirmed that the Deforestation Regulation (EU 2023/1115) will take effect for large companies at the end of the year, aiming to reduce global deforestation and promote sustainable consumption within the EU.
Companies will need to provide attestations confirming that their goods do not contain ingredients sourced from deforested areas. This applies to any goods entering the European Union that may contain materials sourced from deforested regions. More information on how SMEs will need to comply will be provided in the coming months as the regulation will apply to SMEs starting from next summer.
Products such as chocolate, sweets, and other goods containing cocoa sourced from deforested areas in South America will be particularly impacted. The regulation also affects other sectors involving paper goods, chemicals, and complex manufacturing processes.
Businesses, especially those exporting to the EU, should start preparing to meet these new compliance requirements. Keep an eye on further guidance from the European Commission regarding the specifics of the regulation and how it will impact your business.
Overview of the Regulation
The regulation is part of the EU’s broader strategy to combat global deforestation and reduce the EU’s contribution to greenhouse gas emissions and biodiversity loss. It stems from the EU’s 2019 Communication on Protecting Forests and was reinforced through the European Green Deal and EU Biodiversity Strategy for 2030.
Effective since June 2023, the regulation mandates that any operator placing commodities linked to deforestation (e.g., cattle, cocoa, palm oil, soy) on the EU market must prove they are not sourced from recently deforested areas. The aim is to avoid contributing to deforestation and reduce carbon emissions by 32 million metric tonnes annually.
It seeks to ensure that each of these products are:
- Deforestation-free, in that they have not come from a land specifically cleared for growing any of the affected products.
- Wants to ensure that products to be placed on the EU market are produced in complete accordance with relevant local legislation.
- Where these products and their derivatives are placed or would be placed on the EU market, that there is a due diligence statement attesting to compliance with the regulation. It requires customs authorities to check the statement before the goods can be released to free circulation.
Companies are required to ensure that within their due diligence, they have carried out exhaustive information gathering which must be linked to production of the goods. They are to ensure it covers geolocation of all plots of land and production dates among others. They are equally required to ensure that there has been adequate assessment (14 assessment measures covering the whole supply chain) to identify and mitigate any risks so as to reach either a “no or only a negligible risk” outcome.