Things to Know About the New EU Deforestation Regulation
In June of 2023, a new piece of European Union regulation came into force: The Regulation on Deforestation-Free Products. All traders within the block were given eighteen months to become compliant with the new rules – which means that the deadline is 30th December 2024 (though very small businesses enjoy a six-month extension).
What is the New EU Deforestation Regulation?
The rules aim to limit the contribution of consumption in the EU to global deforestation, and to drive down carbon emissions caused by the consumption of timber. It has a particular focus on agricultural expansion, and seeks to address deforestation driven by this phenomenon around the world.
Key Outlines of the Regulation
There are a few things to bear in mind about the new rules.
First, they cover a range of products. The books we read are made, ultimately, using trees. The soybeans that feed cattle in Europe might ultimately be derived from deforestation elsewhere in the world.
Specifically, there are seven key commodities covered by the regulation: cattle, cocoa, coffee, palm oil, rubber, soya, and timber. But there are also products derived from these products. There are exemptions in place for products that would otherwise be thrown away – which, in theory, might limit the amount of waste generated.
Finally, the regulation demands that products be developed in accordance with local environmental laws in the area of production. This will help to prevent companies from sourcing products from parts of the world where corruption and human rights violations are rife, and where environmental safeguards are taken less seriously. It is hoped that this will help to drive up compliance with these principles, not just in the EU, but elsewhere.
Businesses and the Due Diligence Statement
Businesses are responsible for their own compliance under the new rules. They’re required to submit a due diligence statement to a national authority, through an EU information system. Crucially, it isn’t just EU companies who might feel the force of this – where non-EU businesses are involved in supply chains that span the continent, they might find themselves asked by their partners within the union to supply the information necessary for compliance.
Companies are obliged to collect data, and carry out risk assessments establishing how likely supply chains are to be compromised. The risks can then be mitigated with the help of the right audits and investments. This is an area where third-party data protection lawyers can help to ensure compliance.
Businesses that fail to abide by the rules might suffer financial penalties. Fines of up to 4% of the company’s overall turnover might be levied, and revenues might be confiscated. In serious cases, a company might be prevented from trading certain products in the EU.