From 30 December 2024, the new Regulation 2023/1115 of the European Parliament and of the Council will impose further obligations on traders who place on the market, make available on the EU market or export outside the EU, goods and products that may have an impact on deforestation and forest degradation.
The regulations are designed to address the Union’s requirements and objectives for:
- Reducing global deforestation associated with production based on the use of cattle, cocoa, coffee, oil palm, rubber, soya and wood (the full list of regulated commodities and products is set out in Annex 1 to the Regulation)
- Reducing the EU’s greenhouse gas emissions
- Increasing the protection of global biodiversity
Due diligence obligation
The Regulation requires traders to demonstrate that the goods and products they place or make available on the EU market or export from the EU, meet all the requirements of the Regulation, including that they:
- Are deforestation-free
- Have been produced in accordance with the relevant legislation of the country of production
- Are covered by a due diligence statement
In practice, it will therefore be necessary to establish and keep up to date a due diligence system, i.e. a framework of procedures and measures that is reviewed and revised at least once a year.
In addition, the addressees of the Regulation will have to submit so-called due diligence statements. This will be done through an IT system to be implemented by the European Commission by 30 December 2024.
The Regulation imposes a number of new reporting and information obligations on companies, and in some cases requires the appointment of a compliance officer or the performance of external audits.
Regulation EU 2023/1115 – rules and penalties
The correct implementation of the new obligations is to be monitored by the competent national authorities. However, Poland has not yet notified the European Commission of the body to be responsible for this, although it should have done so by 30 December 2023.
The Regulation also requires Member States to lay down rules on penalties for infringements, such as:
- Fines, the maximum amount of which must be at least 4 % of the company’s total annual turnover in the financial year preceding the fining decision
- Confiscation of the products concerned
- Confiscation of revenues gained from transactions involving the products concerned
- Temporary exclusion, for a maximum of 12 months, from public procurement processes and from access to public funding, including tendering procedures, grants and concessions
- In the case of a serious infringement or of repeated infringements, a temporary prohibition from placing or making available on the market or exporting relevant commodities and products;
- In the event of a serious infringement or of repeated infringements, a prohibition from exercising the simplified due diligence
Regulation EU 2023/1115 – Key dates
The new regulations entered into force on 29 June 2023 with the vast majority becoming effective on 30 December 2024.
The Regulation is directly applicable and does not require transposition by Member States. However, it obliges national legislators to adopt, among other things, secondary legislation on penalties and checks. Such legislation has not yet been adopted.
Given the short deadline for compliance with the new rules, it is worth checking now who qualifies as an obligated entity, implementing a due diligence system and, finally, preparing for a possible check. We are here to help.
And if you have any questions, please contact us
