O. With the Deforestation Regulation (Regulation (EU) 2023/1115), the European legislator is taking another decisive step towards a climate-neutral Europe.
This regulation aims to ensure that products placed on the EU market or exported from the EU, made from certain raw materials such as coffee, cocoa, palm oil, soy, cattle, rubber and wood, do not contribute to deforestation or forest degradation contribute. Although the regulation came into force in June 2023, it is currently receiving increased attention as the obligations set are binding from December 30, 2024.
Comprehensive due diligence requirements
Companies in Austria that work or trade with these raw materials, such as wood, or products made from them are particularly affected. Market participants and traders are now faced with the challenge of fulfilling comprehensive due diligence obligations before placing or executing or making available on the market.
“The due diligence obligations consist of an obligation to provide information, a risk assessment and risk minimization,” explains Dr. Peter Wagesreiter, legal expert and partner at HSP.law. “Affected companies must prove that the raw materials used are deforestation-free, comply with the relevant legislation of the producing country and that a corresponding due diligence declaration has been submitted.”
Example
These due diligence obligations apply to both market participants and traders. For example, a publisher that processes paper into books and then offers them to the market for the first time is classified as a market participant. A dealer, on the other hand, is someone who buys and resells these books. Both must ensure that they complete due diligence before bringing the products to market.
Relief for little ones
However, there are relief measures for small and medium-sized enterprises (SMEs) and for market participants in the downstream supply chain. SME traders are allowed to make raw materials or products available on the market if they can provide the information about their suppliers, the reference number of the due diligence declaration and the data about the traders to whom they supply. For market participants in the downstream supply chain, they do not have to fulfill the due diligence obligations again if they have already been fulfilled in the supply chain and a due diligence declaration including a reference number is available.
“However, the relief does not release us from responsibility,” emphasizes Wagesreiter. “Companies that violate the regulation must expect significant fines. These penalties are calculated in such a way that the economic profit from the violation is completely skimmed off. Repeated violations may result in a gradual increase in punishment.”
