Good news for forests around the world: EU deforestation regulation is coming

With a unique regulation worldwide, the European Union wants to reduce its contribution to climate change and species extinction. The EU regulation on deforestation-free products is intended to ensure that agricultural raw materials consumed in the EU in the future have not led to deforestation or forest degradation. In the future, companies must ensure through due diligence that relevant agricultural raw materials have not led to deforestation or forest degradation after 2020 and are legally produced. The regulation applies to coffee, cocoa, natural rubber, palm oil, beef and leather, soy and wood, as well as certain derived products.

Digital tools such as traceability systems play an important role in the implementation of the new regulation, as deforestation can only be detected through knowledge of the production location in combination with satellite data. INA has already developed INATrace, an open source-based traceability system that helps companies meet their due diligence obligations.

The regulation is expected to come into force in June 2023. After the end of the transition phase, the regulation will apply to larger companies from 2024 and to smaller and micro companies from mid-2025, and will apply to all companies that place, export or trade in relevant products in the EU. Basically, the Regulation differentiates between the obligations of operators who place relevant products on the EU market for the first time and traders who trade in products that have already been placed on the market.

The requirements of the regulation depend on whether the company is placing the product on the market for the first time or trading in goods already placed on the market, on the size of the company and on whether the due diligence obligation for a product has already been fulfilled by another company.

Support services for companies

The European Commission will develop a cross-commodity guide for the implementation of the regulation, which will specify the requirements of the regulation.  Companies are already very regularly informed by BMEL in the German Stakeholder Forum on deforestation-free supply chains. In our regular INA lunchbreaks around due diligence, many topics relevant to the EU deforestation regulation are discussed. Missed an episode? Watch the recording of the respective event. In addition, INA and BMZ are promoting the development of tools to support companies such as the "OECD-FAO Due Diligence Handbook on Deforestation" and digital traceability systems. Multistakeholder partnerships at the international level such as the Tropical Forest Alliance (TFA) or the German Forum on Sustainable Cocoa and the Forum on Sustainable Palm Oil (FONAP) also give companies the opportunity to work together on the implementation of due diligence.

Further steps are needed

The expansion of agriculture causes around 90 percent of deforestation worldwide. After China, the European Union is the largest consumer market for agricultural commodities that cause deforestation, such as soy, cocoa or natural rubber. Therefore, the EU regulation against deforestation is a highly significant step for more forest protection. The vote is one of many steps - now it is time for implementation and we are happy to see all committed companies and organizations. As one of the next steps, the European Commission will benchmark the deforestation risk of production countries and competent authorities will carry out proportional controls accordingly.