In January 2025, a new EU ruling, Regulation (EU) 2023/1115 on deforestation-free products, will come into effect. The legislation — known as the EU Deforestation Regulation (EUDR) — aims to combat deforestation by ensuring that EU citizens will not be able to consume products that contribute to forest degradation or to deforestation worldwide. These products include:
- cattle
- cocoa
- coffee
- oil palm
- rubber
- soya
- wood
- certain other products and relevant commodities that contain the above-listed products, or, in the case of animal products, have been fed with the above-listed products.
Relevant products and relevant commodities produced after 30 December 2024 may only be placed or made available on the EU market or exported from it if it is substantiated that
- they are deforestation-free
- they have been produced in accordance with the relevant legislation of the country of production
- they are covered by a due diligence statement.
From a practical point of view, the import and export of said products and commodities will only be allowed if the aforementioned due diligence statements are made available to the customs authorities.
To comply with the conditions laid down by the EUDR, economic operators are expected to fulfill a wide range of obligations, such as record-keeping, risks assessments and the introduction of risk mitigation measures.
In the case of non-compliance with the obligations, severe penalties may be applied under the EUDR. These penalties may include:
- fines proportionate to the environmental damage and the value of the concerned relevant commodities or relevant products of up to 4% of the Union-wide turnover
- confiscation of the related revenue or the concerned relevant products
- exclusion from public procurement processes
- prohibition from placing, making available to or exporting products or commodities from the EU market
The EU Commission will publish a list of the penalties on its website along with the names of the legal entities that have committed infringements, the activities that breached the provisions of the EUDR and a summary of the applied penalties.
It is also worth noting that whenever a natural or legal person believes that an economic operator is not fulfilling its obligations as laid down by the EUDR, they are entitled to report their concern(s) on an amicus curiae basis to the competent national authority.
When provided with a detailed concern of this nature, the competent national authority will have an obligation to initiate an administrative procedure to audit the fulfillment of the EUDR obligations.
The implementation of the new administrative, risk assessment and risk mitigation obligations may require the review of affected supply chains.
KPMG is happy to support and assist you in achieving compliance with EUDR obligations.
