In June 2023, the EU's new deforestation regulation entered into force, holding an important goal: to minimise the EU's contribution to deforestation and forest degradation worldwide.
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The enforcement of the regulation, however, has proven just as complicated as we thought and discussed during its preparations. The heavy reporting obligations placed on all actors, in particular, have raised questions and concern. There is also a big question mark over the schedules of enforcing the regulation and the related obligations.
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Among other things, the deforestation regulation requires actors to report the origins of each raw material used for a product in detail and to preserve the information. The information must also be delivered to the Commission's information system for each product batch produced by the company. As the regulation's scope of application includes the seven materials with the highest contribution to deforestation worldwide (bovines, cocoa, coffee, oil palm, rubber, soy and timber), the reporting tasks are endless.
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In Finland, processed wood products result in millions of such reports every year as our timber trade alone accounts for about 100,000 transactions each year. Raw materials are also used for various follow-up processes. Different phases of the processes produce new, intermediate products, such as sawdust and wood chips, that are used as raw materials for other products. According to the regulation, reports must be made on felled roundwood, the intermediate products and the end products.
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So far, the Commission has not been able to help businesses implement this reporting obligation in a cost-effective manner. Instead of using data transfer interfaces, the Commission requires the reports to be manually entered into the Commission's system. In this era of digitalisation, manually typing vast quantities of data into the Commission's information system makes very little sense. As a result, the deforestation regulation is likely to become one of the most laborious pieces of EU legislation.
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Finnish forest industry knows the origins of its timber. The authorities are also kept up to date on how our forests are used. A notification of forest use must always be submitted before any commercial felling or before processing a particularly important habitat. However, this is not good enough for the decision-makers of the EU.
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The enforcement of the regulation should focus on the felled land area. In other words, whether deforestation or forest degradation is taking place or not. Instead of wasting countless person-workyears on reporting, businesses should be allowed to make use of existing systems and software.
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Luckily, the circumstances in Finland are quite positive. Any deforestation in Finland is not caused by the forest industry but rather the felling of forests to make way for construction and infrastructure. Furthermore, Finnish beef production does not require any significant forest clearing either. Forest degradation, in other words, transforming old-growth forests or naturally regenerating forests into plantations or into forest land with the lowest possible yield, is also not common in Finland. Therefore, the total land areas included in the scope of the deforestation regulation will be relatively small in Finland.
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Nevertheless, this regulation sure has its share of problems.