The European Union has tightened regulations around commodities that contribute to deforestation.
If your company is involved in the manufacturing, sale, import or export of goods that contain cattle products, cocoa, coffee, palm oil, rubber, soya or timber, you’ll need to ensure you’re compliant with new deforestation laws by 30th December 2024.
To help you prepare, here we explain EUDR legislation and how it may impact your business:
Why is the European Union so concerned about deforestation?
There’s a direct link between deforestation and climate change. Forest loss and damage are contributing to approximately 10% of global warming, and 58% of the 21st century’s agricultural deforestation has been caused by farming and harvesting just seven commodities (we’ll discuss these in a moment).
According to the UN FAO, the world has been cutting down 10 million hectares of trees yearly since 2010. And to make matters worse, farming techniques like slashing and burning are accelerating the climate footprint of deforested areas.
What is the EU’s Regulation on Deforestation (EUDR)?
In June 2023, the European Union introduced a new directive to make traders and operators more accountable for the origin of the materials they buy and use. The aim is to prevent products that contribute to deforestation from being imported into, exported from or sold within the EU.
Companies using any of the seven commodities that contribute most to deforestation must prove that these materials were not produced on degraded or deforested land and ensure that they were produced in compliance with relevant local legislation.
Operators need to show due diligence in their sourcing process, such as providing links to production data (e.g. production dates and the geolocation of the plots of land used) and undertaking a whole supply chain risk assessment.
The aim of the EUDR is to increase end-to-end visibility and traceability surrounding material sourcing, prove that products aren’t contributing to deforestation, and help consumers make eco-friendly choices.
What commodities are included in the EUDR framework?
The EUDR covers seven commodities and their derived products. These are:
- Cattle: live cattle, meat and offal, hides, skins and leathers.
- Cocoa: cocoa beans and cocoa products such as cocoa butter, chocolate and cocoa powder.
- Coffee: both roasted and unroasted beans plus husks and skins.
- Oil palm and palm oil products: including palm nuts and kernels, babassu oil, oilcake and solid residues and chemical derivatives of palm oil.
- Rubber: natural rubber and rubber products such as tyres and gloves.
- Soya: whole or broken soybeans and soy products like flour, meal and oil.
- Wood and wood products: including paper, cardboard, raw wood materials like logs and chips, and processed wood products such as furniture, flooring and charcoal.
Who is responsible for complying with EU deforestation regulations?
The EUDR affects everyone in the supply chain, as it applies to operators or traders who buy and sell the seven key commodities AND companies who buy or sell products made from these materials.
As a result, every supply chain stakeholder—from producers and manufacturers to importers, brands, and retailers—needs to ensure their raw materials and finished goods are certified to meet EU deforestation regulations.
How will the EUDR impact food brands?
Any food brand that sells the commodities outlined by the EU or includes cattle products, cocoa, coffee, palm oil or soy in its products will need to ensure that those ingredients come from a deforestation-free source.
Due diligence will be a key part of complying with the EUDR directive, as brands must ensure they have the geolocation coordinates to pinpoint where their commodities were sourced, along with other relevant information on the supplier and country of production.
Using this information, brands will need to analyse the risk of forest degradation and take mitigating measures to reduce the risk of environmental damage.
They should also consider other relevant local laws, such as human rights and the rights of Indigenous People.
Any food brands working with coffee and cocoa farmers that are Rainforest Alliance Certified should make sure those farmers have opted into criteria that ensure they’re EUDR compliant.
How will the EUDR impact beauty brands?
The same due diligence measures that impact food brands also apply to cosmetic and personal care brands.
In addition to ensuring their raw materials meet EUDR criteria, beauty companies may feel the time is right to transition away from ingredients linked to deforestation, such as palm oil.
Some cosmetic and personal care brands have already reformulated their products to incorporate ingredients they feel are more sustainable - for example, Corpus uses coconut oil rather than palm oil.
Which other industries will be affected by EU deforestation laws?
There are so many ways to use the seven commodities controlled by the EUDR that its reach will be massive. While the food and beauty industries will be among the most significantly affected by new EU deforestation laws, other sectors feeling the impact will include:
- Consumer goods manufacturers: any companies using timber, wood or paper in their products will need to prove their materials were harvested using deforestation-free methods. This includes industries like furniture manufacturing, book publishing and toy production.
- Fashion and apparel: the EUDR directive includes leather and animal hides, which will affect the production of accessories like belts and bags. Rubber is also a common material in shoes and waterproof clothing.
- Pharmaceuticals and supplements: companies producing medicines and food supplements must check whether their products include commodities governed by the new deforestation laws. For example, EUDR legislation will impact the sourcing of chondroitin sulfate derived from bovine cartilage. Products containing plant-based ingredients may also be affected, e.g. cocoa is often used in anti-inflammatory supplements.
When will the new EU deforestation laws come into effect?
The EU Regulation on Deforestation was formally adopted in June 2023. However, companies have a transition period of 18 months to ensure compliance with the new legislation.
All large and midsize companies using the seven commodities featured must comply with EUDR laws by 30th December 2024.
Small businesses (firms with an average of 50 employees and a net turnover of around €8 million) and micro companies (firms with an average of 10 employees and a net turnover of €700,000) have until 30th June 2025 to comply with EUDR legislation.
Does your business need help with deforestation compliance?
In addition to being a legal requirement, new deforestation laws provide the perfect opportunity for brands to communicate to customers that they care about protecting the environment.
If your company uses any of the seven commodities covered by the EUDR law and you need help proving compliance or reformulating your products to use other deforestation-free ingredients, Hooley Brown can offer expert guidance and support.
Our global network of legal experts can help you comply with local and EU laws, while our product development teams can help you create new formulas that meet ever-evolving sector legislation.
Book a free consultation call with our director, Clare Daley, to discuss how EU deforestation laws impact your business and how you can meet the requirements.
