The EU Deforestation Regulation suggests banning the importation of items associated with deforestation internationally in order to lessen the carbon footprint of the EU with respect to these imported agricultural products. The EU will use satellite imagery and remote sensing technologies to ascertain if EU imports and exports, namely agricultural items entering and/or leaving the EU, are connected to deforestation. Coffee and cocoa stakeholders must therefore comply to this mandatory regulation providing geo-locations of their plots of land. The regulation focuses mainly on land deforestated after 31st December, 2020 and will take effect from December 2025 for large companies and 30 June 2026 for micro- and small enterprises.
The European Union Deforestation Regulation (EUDR) is aimed at guaranteeing that the select products sold or produced within the EU do not contribute to deforestation or forest degradation worldwide. The EUDR entered into force on June 29, 2023, and provides affected entities 18 months to fully implement the law. As such, December 30, 2024 is the date upon which most affected entities must demonstrate “deforestation-free” compliant products. (In an October 1, 2024 Press Release, the EU Commission proposed a revised phase-in period for reporting and compliance. If approved by the European Parliament and the Council, it would provide an extra 12 months for implementation, making the EUDR law applicable on 30 December 2025 for large companies and 30 June 2026 for micro- and small enterprises.)
The EUDR currently focuses on the import and export of seven key commodities to/from the European Union that are considered to have the largest impacts on global deforestation – cattle, soy, palm oil, wood / timber, coffee, cocoa, and rubber – and certain products derived from these commodities. The law obliges operators and traders that import and / or sell these products on the EU market (or exports them out of the EU market) to exercise mandatory due diligence and evaluate deforestation and other legal risk within their supply chains. Affected companies will be required to submit due diligence statements to a centralized EU information system (registry) that ensures products are “deforestation-free and legally produced.” To claim the products are deforestation-free, the products themselves or their in-scope inputs must not have been produced on land that was deforested or degraded after December 31st, 2020.
The EUDR will require companies to build out a robust due diligence system that covers all of the seven commodities and their derived products sourced globally. For companies with existing due diligence systems, integrating the EUDR requirements will require a significant overhaul due to the level of detail required by the law.
Competent authorities in each EU member state will be charged with monitoring operators and traders’ compliance with EUDR. Spot checks and reviews of due diligence systems based on risk will be conducted. Products found to have a high risk of non-compliance – or lacking sufficient detail – may be held in customs while due diligence checks are completed. Competent authorities may seize product and charge fees to recoup costs of monitoring activities that detect non-compliant products.
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