The UK Forest Risk Commodity Regulation.

How the UKFRC targets illegal deforestation in British supply chains

The UK Forest Risk Commodity Regulation establishes a legal framework to address illegal deforestation in British supply chains. This will be achieved by regulating the import and use of high-risk products. The regulation can be seen as the UK’s counterpart to the EU Deforestation Regulation (EUDR).

Delays in UKFRC implementation: What businesses need to know

The regulation still requires secondary legislation to become operational. Although this was initially expected in early 2024, the process has been delayed due to the general election, leaving the timeline uncertain. The new Labour Government’s stance on the UKFRC is yet to be clarified.

Once the secondary legislation is finalised, a grace period will be put in place to prepare. While the exact duration of the grace period has not yet been announced, it is crucial to stay informed and begin preparations early. Proactively assessing supply chains and ensuring compliance will help businesses adapt once the secondary legislation is finalised.

Products covered by the UKFRC

The regulation focuses on commodities known to contribute significantly to deforestation. The specific list of products will be announced in the secondary legislation, but the focus will be on the following products:

• Cattle products (excluding dairy)
• Cocoa
• Palm oil
• Soy

The UK Timber Regulations already prohibits illegally harvested timber, so these products are excluded from the UKFRC’s scope. It is important to note that products are only covered if deforestation is illegal in the local jurisdiction.

Business obligations under the UKFRC

The UKFRC applies to businesses with a global annual turnover exceeding £50 million. Companies using 500 tonnes or less of a regulated commodity per year may apply for an exemption.

Businesses will have the following obligations:

1. Prohibit the use of illegally produced forest-risk commodities. This includes raw and derived products.
2. Establish a due diligence system. Businesses must assess and mitigate the risk of regulated commodities in their supply chains.
3. Report annually on due diligence activities. This ensures transparency and accountability.

Breaching the regulation can lead to severe penalties, including unlimited monetary fines and other civil sanctions.

UKFRC vs. EUDR: Key similarities and differences

While both the UKFRC and EUDR aim to address deforestation, there are notable differences:

Scope of prohibitions

• UKFRC: Targets only deforestation that is illegal under local laws.
• EUDR: Extends to legal deforestation, requiring goods to be deforestation-free and compliant with local laws, including human rights.

Commodities covered

• UKFRC: Focuses on cattle (excluding dairy), cocoa, palm oil, and soy.
• EUDR: Includes additional commodities such as coffee, rubber and wood.

Businesses in scope

• UKFRC: Targets businesses using regulated commodities with a turnover threshold of £50 million.
• EUDR: Applies to “operators” and “traders” with no turnover threshold but reduced obligations for SMEs.

Penalties

• UKFRC: Allows for unlimited monetary penalties.
• EUDR: Imposes fines up to 4% of EU turnover.

While the EUDR has already entered into force, the timeline for implementing the UKFRC remains uncertain. However, for businesses it is important to start preparing and be proactive.

How we can help your business comply with the UKFRC

Navigating the complexities of the UKFRC can be challenging, but our team is here to help. With in-depth knowledge of the latest regulation’s requirements, we provide clear, actionable guidance to ensure your business stays compliant. From assessing your supply chain risks to setting up a robust due diligence system, we support you every step of the way. Our experts help you gather the necessary data, implement effective compliance strategies, and streamline reporting obligations. Plus, with a dedicated advisor who understands your business context, you’ll always have a trusted partner to turn to for tailored support and expert insights.