What is the Regulation?  

Regulation (EU) 2023/1115 on deforestation-free products (“EUDR”) or the ‘EU Deforestation-Free Regulation’, has been introduced to combat the significant environmental and social challenges posed by deforestation.

The Regulation promotes deforestation-free supply chains. By regulating the import and export of specific products linked to deforestation, the Regulation seeks to mitigate biodiversity loss, climate change, and violations of human rights.

The Regulation aims to reduce carbon emissions caused by EU consumption and production of the relevant commodities by at least 32 million metric tonnes a year, whilst embedding environmental due diligence into the day-to-day operations of businesses. It will aim to address all deforestation driven by agricultural expansion to produce the commodities captured by the scope of the regulation.

Who is the Regulation impacting?

The scope of the EUDR will capture companies trading in seven key commodities cattle, cocoa, coffee, oil palm, rubber, soya and wood, and products derived from these commodities. Annex I of the Regulation contains an extensive list of derived products that the scope will also catch. Companies trading products such as chocolate, coffee, leather, wooden tableware and kitchenware, soybeans and paper must ensure they comply with the Regulation. See a full list of derived commodities in Annex I.

The Regulation applies to both Operators and Traders as defined in Article 2 of the Regulation.

Operators: This means any entity which places relevant products on the EU market or exports them from the EU market, whether through traditional or online means. e.g. Importers or producers of the relevant products in the EU

Traders: This means anyone in the supply chain, other than the operator who, in the course of commercial activity, makes the relevant products available on the EU Market. e.g. a company that buys chocolate from an operator based in the EU and, without transforming it, distributes it to supermarket chains.

Implementation Timeline

29^th June 2023 – The Regulation came into force on 29^th June 2023. As of this date, operators and traders will have 18 months to implement the new rules.

30^th December 2024 – Entry into application for large and medium-sized undertakings. The regulation defines large and medium-sized companies as those that exceed at least two of the following factors:

> 50 employees

> €8m turnover

> €4m balance sheet

30^th June 2025 – Extension of scope to small and micro-sized enterprises. Small businesses are defined in the Regulation as having less than 50 employees.

2028 – Every five years, the Commission carries out a general review of the EUDR, starting on June 30^th.

Why are they important?

In the last 10 years, we have lost 4 million hectares per year of our primary forests. The Food and Agriculture Organization of the United Nations (FAO) estimates that 420 million hectares of forest – about 10 % of the world’s remaining forests, equalling an area larger than the European Union – have been lost worldwide between 1990 and 2020. Deforestation and forest degradation are, in turn, important drivers of global warming and biodiversity loss – the two most important environmental challenges of our time.

The EU is the second-largest importer of agricultural goods linked to tropical deforestation (after China). The EU’s imports account for 36% of deforestation linked to crop products and over 25% of deforestation linked to ruminant livestock products and their equivalents.

Deforestation and forest degradation further global climate deterioration in a number of ways. Not only do they increase greenhouse gas emissions through associated forest fires but they can permanently remove carbon sink capacities, decrease resilience to climate change impacts and substantially reduce areas’ biodiversity and resilience to diseases and pests. Deforestation alone accounts for 11 % of greenhouse gas emissions as stated in the Intergovernmental Panel on Climate Change (IPCC) special report on climate change and land of 2019.

Part 2 of our EUDR guidance will cover obligations and sanctions under the Regulation.

Our expert Commercial Team is on hand to help you navigate upcoming regulations whether its establishing which of your products may be caught by the scope, understanding your obligations or implementing due diligence processes. Get in touch with us today.