On December 4, 2024, the EU introduced a 12-month extension for implementing Regulation
(EU) 2023/1115 on deforestation-free products. The regulation, initially effective June 29,
2023, targets commodities linked to deforestation, such as cattle, wood, cocoa, and palm oil.
Businesses must ensure their products do not originate from deforested land or contribute to
forest degradation. This regulation is part of the EU’s commitment to reducing greenhouse
gas emissions, protecting biodiversity, and promoting sustainable supply chains globally.

The Background and Objective of the EU’s Regulation

The main motivation behind this regulation is the expansion of agricultural land, which is a
primary driver of deforestation. By implementing these rules, the EU aims to reduce carbon
emissions by at least 32 million metric tonnes annually, while also addressing both
deforestation and forest degradation caused by the agricultural expansion.

Implications for Businesses and Global Markets

This regulatory shift presents both challenges and opportunities. Companies involved in the
trading or production of the regulated commodities will need to adapt to the new
requirements, proving that their products do not originate from deforested areas. This
change is expected to trigger a transformation in supply chain management practices
worldwide.

Opportunities for the Clients

For investors and businesses, this regulation opens up avenues to invest in sustainable
practices and technologies that enhance supply chain transparency and sustainability.
Companies that proactively adjust to these regulations can potentially gain a competitive
advantage in a rapidly evolving global market.

What’s Next?

The regulation will be fully applicable by 2026, with large and medium businesses expected
to comply by December 30, 2025, and smaller enterprises by June 30, 2026. Companies
that delay their transition risk losing access to the lucrative EU market, while proactive
adopters will gain a competitive edge.

Want to learn more about how these changes might affect your portfolio or business
strategy? Our team is here to assist. Don’t hesitate to reach out. Let’s create a future
together.