"deforestation free" supply chains: New EU Regulation approved
As part of the sustainability policies promoted by the EU, Reg. (EU) 1115/23 was published on June 9, 2023.
Reducing deforestation and forest degradation
Deforestation and forest degradation are occurring at an alarming rate, aggravating climate change and the loss of biodiversity. The main driver of deforestation and forest degradation is the expansion of agricultural land to produce commodities such as cattle, wood, palm oil, soy, rubber, cocoa or coffee. The EU is a relevant consumer of commodities associated with deforestation and forest degradation. The objective of the regulation is therefore to curb deforestation and forest degradation that is provoked by EU consumption and production. This, in turn, is expected to reduce GHG emissions and global biodiversity loss.
The "deforestation free" commodities: soy, cattle, oil palms, wood, cocoa, rubber and coffee
Commodities: soy, cattle, oil palms, wood, cocoa, rubber and coffee, and some of their derivatives, such as leather, chocolate and furniture will no longer contribute to deforestation and forest degradation in the EU and the rest of the world. In fact, these products will only be placed on the EU market if they are produced lawfully (according to the rules in force in the country of origin) and " deforestation free" . The list of commodities that are covered will be regularly reviewed and updated
"Deforestation free" means that the commodities and derived products, including those used or contained in the relevant products, have been produced on land that has not been subjected to deforestation. The "cut off date" established to determine if land has been subject to deforestation is December 31, 2020.
New Due diligence rules for companies
The Commission will operate a benchmarking system with which it will assess the level of risk of deforestation and forest degradation of each country or part of a country, attributing a low, standard or high risk, and also taking into account agricultural expansion for production of the seven raw materials and derivative products. Firms' obligations will depend on the level of risk.
The new rules require operators who place affected raw materials or products on the EU market for the first time to carry out due diligence to ensure that they:
a) they have not been produced on land deforested or degraded after 31 December 2020;
b) have been produced in compliance with the legislation of the country of production.
If one of the two conditions is not met, the products cannot be placed on the EU market.
Due Diligence Statement
Operators will be required to enter a due diligence statement in a European information system in which they certify that they have exercised due diligence, and that the products they place on the market comply with EU rules. This declaration will also contain essential information for monitoring, specifically the geographical coordinates of the agricultural land for the cultivation of raw materials.
Enforcement and Sanctions
Member states will have to establish proportionate, effective and dissuasive sanctions. The maximum amount of the fines cannot be less than 4% of the company's annual turnover. Furthermore, the authorities are provided with broad powers regarding products that do not comply with these new rules.
The new regulation will become applicable, for the most part, on December 30th 2024. Micro and small enterprises will have a longer adjustment period and will benefit from other specific provisions.
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