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Last year, the EU’s Deforestation Regulation (EUDR) became law with the regulation set to apply on December 30, 2024. The law requires that all cattle, coffee, palm oil, rubber, soya, and wood, or any derivatives thereof, be produced without substantially contributing to deforestation in the EU or the product’s country of origin. However, German cocoa company Albrech & Dill Trading is trying to stop the implementation of the EUDR by filing a lawsuit in the Cologne Administrative Court. Climate Court reports on the filing stating:
“In order to accurately draft the due diligence statements, companies will require detailed information about where their products and each component are sourced from. The due diligence system also requires reporting of information, including, for instance, the quantity of the sourced products, their origins, geolocation of commodities, contact details of suppliers, operators, and traders, and information showing that products were sourced in compliance with the EUDR (See Article 9 EUDR).
Harings argues that these administrative requirements are too burdensome for companies. Albrecht & Dill, for example, would have to store geodata from 40,000 sources. They also think that small farmers would be pushed out of the market since they’re often unable to provide certain required data.”
The lawsuit appears to be the first of its kind and the concerns raised in the lawsuit are troubling. According to Albreach & Dill, the systems to monitor and manage supply chain tracing on the level required by the EUDR are not yet fully developed and companies are not confident in their ability to comply. Non-compliance under the EUDR can result in fines as high as 4% of a company’s annual turnover in the EU so the stakes are high. If the lawsuit is successful, then it could create a ripple effect on other EU ESG legislation, potentially jeopardizing key pieces of the EU Green Deal.
Our members can learn more about ESG litigation in the EU here.
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