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New E.U. deforestation law and global supply chains

The recent E.U. regulation intended to prevent deforestation means that prospective importers need to make sure their supply chains are sustainable and comply with relevant human rights law

The new EU deforestation regulation, passed in June and enforceable as of December 2024, regulates the import and export of a range of products that the E.U. has deemed worsen deforestation. The law emerged because the E.U. has contributed significantly to global deforestation over the last 30 years, and this law is a way of mitigating future impact.

Though it is an E.U. directive, the law will apply equally to countries inside and outside the European Union. It’s an effort to strengthen relationships with partner countries and make sure all parties are working towards common agreements, like the Paris Agreement on climate change or the Global Biodiversity Framework. The general outcome of the law will be that no products which involved deforestation at any point in their supply chains will be allowed in the E.U.

Table of contents

1. What does the deforestation law cover?

2. How can your business comply with the deforestation law?”>

What does the deforestation law cover?

The new forest protection legislation applies to all companies that are involved with selling products in the E.U. Any manufacturers, retailers, importers, or exporters of products will need to comply with regulations. Financial institutions, though originally included when this legislation was proposed in 2022, will not be subject to these regulations.

The European Union has also named specific products that are commonly connected to deforestation. Those are:

  • Cattle
  • Cocoa
  • Wood
  • Coffee
  • Oil
  • Palm
  • Rubber
  • Soy
  • Any products listed in Annex 1 of the regulation

A forest of trees with sunlght shining through it

The production, distribution, and sale of these products must be deforestation free from December 30, 2024 on. That means paying attention to conservation of forests by making sure they are not converted into agricultural land, and that unsustainable harvesting practices don’t lead to a loss of biodiversity. In other words, production needs to respect and preserve local ecosystems.

To be truly sustainable, manufacturers also need to comply with the labor and environmental laws in place in their countries, as well as make sure not to harm indigenous populations. Respecting human rights is a crucial part of building a sustainable supply chain.

As a manufacturer, you need to demonstrate compliance with the anti-deforestation measures in order to export products to the European Union. This means meticulously documenting everything related to the regulations. For example, you need to provide geolocation data on the procedures of your products, perform risk assessments for each one of your products, and make sure your operations are environmentally sound. The E.U. will categorize countries according to the risk they pose, and each country will therefore have looser or stricter requirements for production.

If your company fails to meet deforestation regulation requirements, it may face fines equalling up to 4% of its annual turnover. You may also be forced to remove certain products from the market, as well as to halt distribution.

A wide wooded area cleared of trees

How can your business comply with the deforestation law?

Since these forest protection regulations are only a year and a half away, it’s imperative that you begin incorporating them now. In addition to avoiding deforestation, you also need to follow regional and national laws, adhere to labor and human rights law, and respect indigenous peoples’ rights. For example, American companies need to be sure to comply with OSHA regulations in their industries.

The first part of ensuring compliance with the E.U. deforestation measure is to set new standards in your business. Use the criteria outlined in the regulation, in particular the guidelines set for countries in your risk category, to understand how you can build a sustainable supply chain.

Then, you should begin adjusting and measuring those processes by using checklists at work, making sure your employees don’t miss anything. These checklists help mitigate risks during every step of your supply chain, including gathering environmental resources, keeping your workers safe, and dealing with anywaste created by your supply chain. In addition to providing a concrete list of tasks and a roadmap to compliance, checklists also make documentation much easier, especially digital checklists which are stored in the cloud.

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