In a decisive move to address global deforestation and forest degradation, the European Union has introduced Regulation (EU) 2023/1115, which became enforceable on June 29, 2023. This regulation targets the environmental and social consequences of deforestation linked to EU consumption, aiming to mitigate climate change and preserve biodiversity.
Data sourced from SGS Digicomply Regulatory Compliance Software
Overview of Regulation (EU) 2023/1115
Regulation (EU) 2023/1115 significantly expands the scope of its predecessor, Regulation (EU) No 995/2010, by including a broader range of commodities and products and introducing more stringent due diligence requirements for operators and traders within the EU market.
Objectives and Scope
The regulation primarily aims to:
- Reduce Deforestation and Forest Degradation: It mandates that products placed on or exported from the EU market must not originate from land that was deforested after December 31, 2020, nor contribute to forest degradation.
- Promote Sustainable Supply Chains: Operators and traders must implement robust due diligence systems to ensure their products are deforestation-free and comply with the laws of the production country.
- Enhance Transparency and Accountability: The regulation requires detailed reporting and risk assessments, ensuring greater transparency across supply chains.
Key Provisions
- Due Diligence Requirements: Operators must gather detailed information about their products, conduct risk assessments, and apply risk mitigation measures. They are also required to submit due diligence statements that are accessible to authorities and, in certain cases, the public.
- Geographical Risk Assessment: The European Commission will classify countries or regions into low, standard, or high-risk categories, which will influence the level of scrutiny required.
- Regular Compliance Checks: Authorities will conduct regular checks, with non-compliance potentially leading to penalties such as fines up to 4% of a company’s EU turnover, product confiscation, or exclusion from public procurement.
Impact on Affected Commodities and Products
The regulation targets a wide array of commodities and their derived products:
- Commodities: The regulation covers cattle, cocoa, coffee, palm oil, rubber, soy, and wood, focusing on their significant roles in driving deforestation.
- Derived Products: Items such as leather, chocolate, tires, and furniture, made from the aforementioned commodities, are also subject to the regulation.
These products must be “deforestation-free” and adhere to the legal requirements of their country of origin, including land use rights, environmental protection, and labor laws.
Enforcement and Penalties
The regulation establishes strict enforcement mechanisms, including:
- Due Diligence Statements: Operators must demonstrate compliance through due diligence statements.
- Regular Checks: Competent authorities will conduct unannounced inspections, particularly for high-risk products.
- Penalties for Non-Compliance: Penalties include fines up to 4% of annual EU-wide turnover, product confiscation, and exclusion from public procurement.
Conclusion
Regulation (EU) 2023/1115 marks a significant advancement in the EU’s efforts to combat deforestation and promote sustainable supply chains. By implementing rigorous due diligence requirements, the regulation underscores the EU’s commitment to protecting forests and mitigating climate change on a global scale.
