ANALYSIS: What Cows, Cocoa Have in Common Under New EU Regs

Your morning mocha and your soda could become more environmentally friendly under two new EU regulations, the Carbon Border Adjustment Mechanism Regulation (CBAM) and the EU Regulation on Deforestation-Free Products (EUDR). These regulations seek to minimize the environmental impact of certain goods imported into the EU.

The regulations each apply to a discrete list of commodities, with no overlapping coverage between the two.

Starting Oct. 1, companies that export carbon-intensive products will have to monitor and track emissions related to their production. US-based businesses will need to supply data to their EU-based partners, and maintain records, to ensure that regulated products can enter the EU. Manufacturers, producers, and importers must know the details of their supply chains to comply with these regulations.

CBAM seeks to reduce emissions by requiring importers to purchase certificates for certain industrial commodities that are imported from countries, including the US, that do not subject them to a carbon pricing program.

Beginning Jan. 1, 2026, entities importing covered goods into the EU must buy CBAM certificates that cover the cost of their emissions (based on the EU Emissions Trading System price) or show proof that a carbon price has already been paid.

EUDR prevents some agricultural commodities and certain products derived from those commodities from being imported into the EU if they come from land that was deforested after 2020. All imported covered products must be accompanied by a due diligence statement indicating that they don’t originate from deforested land.

The regulation’s due diligence requirements are extensive and include precise locations of production for every shipment, including comingled shipments from multiple places of origin. If the geolocation of the commodity can’t be identified, it may not be imported into the EU.

Risk assessment requirements under EUDR are also broad and include human rights, especially those of indigenous people; risk of corruption or circumvention; and country benchmarking. EUDR took effect on June 29, and it gives large companies an 18-month implementation period. Small and medium enterprises have 24 months to comply.

Bloomberg Law subscribers can find related content on our Transactional Practical Guidance page, our EU Standards and Labeling page, and our EU Documentary Requirements page.

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