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On 17 November 2021 the EU published a draft Regulation seeking to introduce new due diligence requirements aimed at tackling deforestation and forest degradation (see press release here).

As set out in the proposal, deforestation and forest degradation impacts climate change and the loss of biodiversity and, as a consumer of commodities connected with this issue, the EU contributes to the problem The proposal forms part of the EU Green Deal initiative and is intended to complement the EU’s Sustainable Corporate Governance initiative, under which horizontal due diligence requirements are expected in respect of adverse human rights and environmental impacts in businesses’ value chains more generally.  See previous client alerts on this topic here and here.

The aim of the proposal is to “minimise consumption of products coming from supply chains associated with deforestation or forest degradation and increase EU demand for and trade in legal and ‘deforestation free’ commodities and products”. The draft legislation notes that the main driver of deforestation and forest degradation is the expansion of agricultural land to produce commodities such as cattle, wood, palm oil, soy, cocoa and coffee.

The proposal will repeal and replace the existing EU Timber Regulation (“EUTR“) which has imposed due diligence requirements on certain timber products for a number of years already.  As noted above, the new proposed Regulation will have a broad scope capturing not only wood, but the other types of commodities listed above.  It will adapt and replace the EUTR due diligence procedure by including measures such as:

  • the submission of a due diligence statement to the competent authority confirming that due diligence has been undertaken before placing commodities and products on the Union market or exporting them from the market;
  • a geographic information requirement which will link the commodities and products to the plot of land on which they were produced. This will enable the use of satellite images to confirm whether the commodity or product is compliant;
  • increased cooperation with customs; and
  • country benchmarking.

Penalties to be established at the Member State level for companies that violate the Regulation include: fines proportionate to the environmental damage and the value of the relevant commodities or products concerned, with a maximum amount of up to 4% of companies’ annual turnover; confiscation of the relevant commodities and products; confiscation of revenues; the suspension or prohibition of relevant economic activities; and exclusion from public procurement processes.

There have already been calls by MEPs for the range of commodities covered by the proposal to be expanded to include, for example, rubber and maize and for the approach to human rights to be strengthened.

The initiative is still at the proposal stage and is subject to review and subsequent amendments from the European Parliament and Council of the European Union. The ordinary legislative process to adopt the Regulation is unlikely to be concluded before the end of 2022.

It is worth bearing in mind that the UK has also committed to addressing this issue. On Wednesday 10 November 2021, the UK Environment Act 2021 entered into force (the “Act“).  The Act aims to tackle deforestation and protect rainforests by prohibiting “Forest Risk Commodities” connected with illegal deforestation and requiring businesses to conduct robust due diligence.  Secondary legislation to implement these requirements still needs to be adopted.

These developments reflect the increased scrutiny around deforestation and forest degradation. Companies should therefore be prepared to conduct effective due diligence practices to mitigate any potential risks in their supply chains and business operations.


Jennifer Revis is a partner in Baker McKenzie's London office and co-leads our EMEA Customs Team.
Jennifer focuses her practice on the public regulation of international trade, particularly in a wide range of customs compliance issues. She regularly advises clients on import matters, including customs valuation, rules of origin, and classification. She has worked with clients designing and implementing their compliance programs, policies, procedures and risk assessments, and assisting them in customs audits. She has significant experience in managing global customs projects and disputes, particularly in the area of customs valuation (transfer pricing; assists; royalties). Jennifer also advises on FTAs and trade remedies matters.
Jennifer has been consistently recognised as a "Leading Individual" for Customs & Excise and “Next Generation Partner” for Trade, WTO Anti-Dumping And Customs. Clients describe her as "an outstanding customs lawyer and litigator with fantastic experience. She is also easy to work with and leads her team with aplomb", "without a doubt, one of the best customs lawyers in the business (…) with an exceptionally deep knowledge of customs valuation concepts, as well as considerable experience applying those concepts in a variety of jurisdictions."
Jennifer has been on secondment to the UK customs authorities (Her Majesty's Revenue and Customs) in their tax and excise litigation department and to the Firm's European Law Centre in Brussels.


Graham Stuart is a partner at Baker McKenzie's London office specialising in product regulation and environmental, health and safety law.


Rachel MacLeod is a senior associate in Baker McKenzie's London office. She advises companies on the "cradle-to-grave" regulation of a broad range of products sold on the EU and UK markets. She also advise companies on how to comply with their operational environmental and health & safety obligations.


Adeel Haque is an associate in Baker McKenzie's London office. He is a member of the International Commercial & Trade and Antitrust & Competition practice groups. Adeel qualified in September 2019 and has spent time working in the Firm's Hong Kong office.


Roma McCool is an Associate in Baker McKenzie London office.

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