On April 19, 2023, the European Parliament adopted its position on the European Commission (EC) Proposal for a Deforestation Regulation at first reading.
Companies will be able to sell products in the EU only if the product’s supplier has issued a “due diligence” statement confirming that the product does not come from deforested land or has resulted in forest degradation, including irreplaceable primary forests.
Also, the Council approved the regulation aimed at reducing the risk of deforestation and forest degradation linked with products placed on or exported from the EU market.
The EU is a significant consumer and trader of goods and products that contribute significantly to deforestation. The new restrictions are intended to ensure that the EU’s consumption and trade of these commodities and products do not contribute to deforestation or further degradation of forest ecosystems.
Due Diligence requirements in the Regulation
The Regulation establishes mandatory due diligence procedures for all operators and merchants that place, make available, or export from the EU market the following commodities: palm oil, cattle, timber, coffee, cocoa, rubber, and soy.
The requirements also apply to a variety of derivative items, including chocolate, furniture, printed paper, and specified palm oil-based derivates (used as components in personal care products, for example).
Operators must be able to trace the goods they sell back to the plot of land where they were grown. Simultaneously, the new rules seek to eliminate duplication of requirements and to reduce administrative burden on operators and authorities. Small operators may also be able to rely on larger operators to prepare due diligence declarations.
The rule establishes a benchmarking system in which nations inside and outside the EU are assigned a level of risk connected to deforestation and forest degradation (low, standard, or high).
The level of special duties for operators and member state agencies to carry out inspections and controls will be determined by the risk category. This will allow for improved surveillance in high-risk nations while simplifying due diligence in low-risk countries.
Competent authorities will have to conduct checks on 9% of operators and traders dealing products from high-risk countries, 3% from standard-risk countries, and 1% from low-risk countries to ensure that they are fulfilling the regulations’ requirements. Furthermore, responsible authorities will conduct checks on 9% of the mandatory commodities.
The revised guidelines also consider the protection of human rights associated to deforestation, and a reference to the principle of free prior and informed consent of indigenous peoples has been inserted.
Penalties are included in the regulation, and member states must ensure that they are effective, appropriate, and dissuasive.
Fines proportionate to the environmental harm and the value of the relevant commodities or products should be set at 4% of the operators’ annual sales in the EU and should entail a temporary exclusion from public procurement processes and access to public funding.
Stay up-to-date with the latest news on the Deforestation regulation by subscribing to CSR Europe EU Update Webinar on Sustainable Supply Chains taking place on the next 6th of June.
For more information:
EU Affairs Senior Specialist