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New EU Deforestation Regulation: Implications and How ComplyMarket Can Help

In recent years, the European Union (EU) has intensified its efforts to combat deforestation and forest degradation, aiming to reduce its contribution to global environmental issues such as greenhouse gas emissions and biodiversity loss. One significant stride in this direction is the new EU deforestation regulation, which sets stringent rules for placing and making available on the EU market, as well as exporting products that contain, have been fed with, or have been made using specific commodities linked to deforestation.

Understanding the New EU Deforestation Regulation

The EU deforestation regulation, which applies to products listed in Annex I of the regulation, targets commodities including cattle, cocoa, coffee, oil palm, rubber, soya, and wood. The core objectives are to:

• Minimize the EU’s contribution to global deforestation and forest degradation.
• Reduce associated greenhouse gas emissions and biodiversity loss.

Key provisions include prohibiting the placement or making available of non-compliant products on the market and mandating operators to exercise due diligence to ensure that the products are deforestation-free, comply with the legislation of the country of production, and are covered by a due diligence statement.

Article 1: Scope and Objectives

The regulation sets out comprehensive rules for relevant products, focusing on minimizing the EU’s deforestation footprint and contributing to global environmental conservation efforts. It mandates compliance for commodities listed in Annex I, ensuring they are deforestation-free and legally produced.

Article 3: Prohibition

It explicitly prohibits placing or making available on the market or exporting relevant commodities and products unless they meet specific conditions:

• They are deforestation-free.
• They comply with the legislation of the country of production.
• They are accompanied by a due diligence statement.

Article 4-5: Obligations of Operators and Traders

Operators must exercise due diligence to verify compliance before placing products on the market or exporting them. This involves gathering detailed information, conducting risk assessments, and implementing risk mitigation measures. Traders, especially SMEs, have specific record-keeping and information-sharing obligations to ensure transparency and traceability within the supply chain.

Articles 6-13: Due Diligence and Risk Mitigation

These articles detail the due diligence process, emphasizing the need for operators to collect comprehensive information, assess risks, and implement adequate risk mitigation measures to ensure negligible risk of non-compliance.

ComplyMarket's Role in Assisting Compliance

As businesses navigate the complexities of the new EU deforestation regulation, ComplyMarket emerges as a crucial ally. ComplyMarket offers advanced IT solutions and comprehensive services to help businesses meet their reporting and due diligence obligations efficiently and effectively.

Reporting and Due Diligence Solutions

ComplyMarket provides a robust platform for managing due diligence processes, ensuring compliance with the regulation's stringent requirements. The platform facilitates:

• Comprehensive Data Collection: Gathering necessary information, documents, and data to demonstrate product compliance, including geolocation details and legal production evidence.
• Risk Assessment: Advanced risk analysis tools to evaluate the potential risk of non-compliance based on criteria such as deforestation rates, production trends, and legal enforcement in the country of origin.
• Risk Mitigation: Implementation of appropriate measures to mitigate identified risks, ensuring products are deforestation-free and comply with relevant laws.

IT Solutions for Compliance

ComplyMarket's IT solutions streamline the compliance process through:

• Automated Due Diligence Statements: Generating and managing due diligence statements in accordance with Article 4(2), ensuring all necessary information is included and readily available for submission to competent authorities.
• Supply Chain Transparency: Enhancing supply chain visibility, allowing businesses to trace products back to their origin and ensure compliance at every stage.
• Regulatory Updates and Guidance: Keeping businesses informed about regulatory changes and providing guidance on best practices for maintaining compliance.

Benefits for Businesses

Partnering with ComplyMarket offers several advantages:

• Efficiency: Automated and streamlined processes reduce the administrative burden and enhance operational efficiency.
• Accuracy: Advanced tools ensure accurate data collection and risk assessment, minimizing the risk of non-compliance.
• Compliance Assurance: Expert guidance and robust systems provide confidence in meeting regulatory requirements, avoiding potential penalties and market restrictions.