February 20, 2024. Forests are one of the most precious elements of our planet. They are home to most of Earth’s biodiversity, maintain ecosystem functions, and protect the climate system. Moreover, forests provide livelihoods and income for about one-third of the world’s population. Forests cover 31% of the global land area with higher concentrations in five countries: Russia, Brazil, Canada, the United States, and China). Nevertheless, deforestation and forest degradation are huge issues. According to the Food and Agriculture Organization of the United States (FAO), about 10% of the world’s forests have been lost between 1990 and 2020. Agriculture expansion is the first driver of such phenomena.
Considering the above, the European Union is taking action to reduce its impact on deforestation coming from its consumption of certain commodities and products. In light of this, on May 31, 2023, the European Commission issued Regulation (EU) 2023/1115. The Regulation establishes rules on the placing on the EU market and export from the EU of certain products containing or made of cattle, cocoa, coffee, oil palm, rubber, soya, and wood. These feedstocks have been identified as accounting for most of the deforestation caused by the EU.
Deforestation-free measures
Regulation (EU) 2023/1115 provides that products mentioned in Annex I and above commodities cannot be placed on the EU market unless they fulfil all the following conditions:
- They are deforestation-free
- They have been produced according to the legislation of the country of production
- They are covered by a due diligence statement. Simplified due diligence applies to products produced in countries classified as low-risk
Companies shall ensure that their products meet these criteria before placing them on the EU market or exporting them. To this end, they should submit a due diligence statement to the competent authorities through an online information system.
In light of this, companies must establish a due diligence system to review when necessary and at least once a year. The system consists of the following elements:
- Collection of information for each supplier to be kept for five years
- Risk assessment — Companies cannot place the products on the market or export them unless there is no risk or only a negligible risk of non-compliance
- Risk mitigation — Procedures and measures to achieve an acceptable level of risk
- Annual publication of a report on the procedures applied and actions taken
The law foresees some exceptions for micro, small, and medium-sized enterprises (SMEs).
Competent authorities will carry out checks and suspend the placing on the market and export of non-compliant products. Penalties will apply as well.
Authorised representative and operators in third countries
For products placed on the EU market from a third country, the first natural or legal person in the EU who makes them available is responsible for compliance with the Deforestation Regulation.
Furthermore, companies may mandate an authorised representative to submit the due diligence statement on their behalf, but they remain responsible for compliance.
Relevance for cosmetic products and application timeline
As clarified by the European Commission, the Regulation does not apply to finished cosmetic products as they are not among the products included in Annex I. However, it might apply to certain raw materials used as cosmetic ingredients, such as palm oil, consequently affecting the supply chain.
The Regulation entered into force on June 29, 2023, and will start applying as of December 30, 2024. There is a longer transition period until June 30, 2025, for micro and small enterprises.
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References:
- CIRCAB. (2023). Frequently Asked Questions. Implementation of the EU Deforestation Regulation. Retrieved on 15/02/2024
- EUR-Lex. (2023). Regulation (EU) 2023/1115 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation. Retrieved on 15/02/2024
- European Commission. Regulation on Deforestation-free products. Retrieved on 15/02/2024
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