European Zero Deforestation Regulation: a commitment to sustainability (and compliance, too)

To meet the challenges of climate change and biodiversity loss, the European Union has adopted the Regulation (EU) 2023/1115. This regulation, also known as the Deforestation Regulation, prohibits the placing on the EU market and export of products linked to deforestation or forest degradation. Traceability and transparency are at the heart of this initiative, with the aim of making supply chains more sustainable.

Presentation of the Regulation Against Deforestation (RDUE)

The European Zero Deforestation Regulation (EUDR) aims to prohibit the marketing in the EU of products derived from deforested land after December 31, 2020. This regulation reinforces the European legal framework for forest protection and imposes strict zero deforestation criteria.

The objectives of the EUDR

The main aim of the Deforestation Regulation is to reduce deforestation and forest degradation. By requiring that products marketed or exported from the EU respect sustainability criteria, it contributes to the preservation of forests and the protection of biodiversity.

Company obligations

To comply with the European Zero Deforestation Regulation, companies must ensure that the products they put on the market meet three key criteria:

• Zero deforestation: The products in question that contain the commodities in question must have been produced on land that has not been subject to deforestation activities after December 31, 2020, or have been fed with or manufactured from such products.

For products containing or made from wood, “zero deforestation” products are defined as those whose wood has been harvested without causing forest degradation after December 31, 2020.

• Compliance with the legislation of the country of production This notion refers to the laws applicable in the country of production, which include the legal status of the production area, i.e. :
  • land use rights
  • environmental protection
  • forestry rules, including forest management and biodiversity conservation, when directly related to timber harvesting
  • third-party rights
  • employment rights
  • human rights protected by international law
  • the principle of free, prior and informed consent of indigenous peoples
  • tax, anti-corruption, trade and customs regulations.
• Due diligence statement: Companies must establish a due diligence system to ensure that imported or exported products comply with zero deforestation criteria and local regulations.

What is due diligence?

The due diligence system is a mandatory procedure to be implemented by companies subject to the deforestation regulation. It aims to verify that products comply with zero deforestation criteria. This measure must be applied at least once a year. The process comprises three main stages:

At this stage, due diligence allows us to dispense with the risk assessment and risk mitigation stages.

At this stage 2, if no or negligible risk is found, the products concerned may be imported or exported.

If no or negligible risk is found at the end of stage 3, the products concerned can be imported into and exported from the EU.

Failing this, the products are banned from import or export.

If the products concerned are compliant at the end of these stages, operators and merchants will have to file due diligence statements (DDS) in the TRACES NT information system, which will centralize all declarations.

have to file due diligence statements (DDS) in the TRACES NT information system, which will centralize all declarations.

Operators and traders have the option of appointing an agent to file due diligence declarations on their behalf.

Once the due diligence declaration has been submitted, it will be assigned a reference number, which must be entered on the customs declaration for the products concerned.

Operators and merchants will have to review their due diligence system at least once a year.

The European Commission will have to draw up a list of countries and regions according to three risk categories: low, standard and high. This list must be published by December 30, 2024.

Products covered by the European Zero Deforestation Regulation

The regulation against deforestation and forest degradation applies to :

• “Commodities involved”: cattle, cocoa, coffee, oil palm, rubber, soya and wood.
• “Products in question” which contain the basic products in question, or which have been fed or manufactured from them. These include by-products such as leather, cocoa fat, soybean oil and industrial fatty alcohols.

The regulation is likely to be re-examined by the European Commission with a view to extending it to other basic products according to the following timetable:

By June 30, 2025 at the latest: possible extension to other natural ecosystems, other commodities (corn and biofuels) and financial players (banks that finance activities that contribute to deforestation).

While this regulation impacts several economic sectors linked to commodities associated with deforestation, it also impacts several sectors indirectly, such as :

• Alcohols: wood for ageing cases and barrels, cocoa and coffee-based flavors and alcoholates for spirits.
• Biofuel sector: palm oil and soy are used in biofuel production.
• Cosmetics and pharmaceutical industries: for palm oils, soy used in numerous products (creams, lotions and medicines).
• Textile industries: for the use of soy-derived products (such as vegetable leather, rubber (for footwear) or bovine leather.

The operators concerned

The regulations apply to :

• “Operators” who, in the course of a commercial activity, place the products in question on the market for the first time or export them.
• “Merchants” – i.e. anyone in the supply chain, other than operators – who, in the course of a commercial activity, make the products in question available on the market.

The concept of making a product available on the market is a broad one, encompassing any supply of a product intended for distribution, consumption or use on the EU market in the course of a commercial activity, whether in return for payment or free of charge.

Penalties for non-compliance

Checks will be carried out by the competent authorities of each EU member state. Annual checks must cover at least :

• 1% of operators whose products come from low-risk countries or parts of low-risk countries
• 3% of operators whose products come from standard-risk countries or parts of countries
• 9% of operators whose products come from high-risk countries or parts of high-risk countries, and 9% of the quantity of each of the products in question containing or manufactured from the commodities in question.

The subject is therefore far from theoretical. It is highly likely that imports will form the basis of the control authorities’ database, through simple sorting and searches based on nomenclature codes and countries of origin. Operators, particularly those who buy or sell large quantities of the (commodity) products concerned, must ensure that they are organized and ready to comply with these new requirements by December 30, 2024.

The regulation provides for several types of penalties:

• Immediate provisional measures: seizure of products, suspension of marketing or export.
• action in the event of non-compliance: prevent the product in question from being placed or made available on the market or exported, immediately withdraw or recall the product in question.
• Fine of up to 4% of annual sales throughout the EU.
• Confiscation of products and income earned by the operator and trader.
• Temporary ban on marketing, making available or exporting the products in question in the event of serious and repeated infringements.

Dates to remember for RDUE

The regulation came into force on June 29, 2023. However, the main obligations on operators and merchants mentioned in this article will apply from December 30, 2024 (from June 30, 2025 for micro and small businesses).

In response to requests from operators and traders, on October 2, 2024 the European Commission published a proposal(COM(2024) 452 final) to amend the Zero Deforestation Regulation with regard to the provisions concerning its application date.
Subject to the approval of the European Parliament and the Council, this regulation would enter into force on December 30, 2025 for large companies and on June 30, 2026 for micro and small companies. This 12-month postponement is intended to give operators, traders and competent authorities more time to prepare for compliance obligations linked to the fight against deforestation.

Operators and traders will have to rapidly integrate a due diligence system into their internal processes to ensure that the products concerned that they place on the EU market or export from the EU meet the “zero deforestation” requirements of the regulation and comply with the relevant legislation of the country of production.

Our experts and customs specialists are available to support you in registering on the TRACES NT platform, and in implementing the due diligence system. We can help you define standardized and secure internal processes, facilitating the collection of information and the necessary controls.

Within your organization, whether you’re an SME or a large corporation, who will be responsible for managing these processes? Where will the data be stored in your information system? What will be the trigger for launching the necessary formalities for a product concerned? How will you identify products requiring special attention in your Master Data?

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