ÄIO Products and European Union Deforestation Regulation Compliance
By Magdalena Koziol, ÄIO’s Head of Cosmetics Development
The year 2025 marks the implementation of the European Union Deforestation Regulation (EUDR). Initially scheduled to take effect in December 2024, the European Commission has extended the deadline to December 2025 for large companies and mid-2026 for smaller enterprises. This regulation has significant implications for industries that rely on the seven key commodities covered under the EUDR: cattle, cocoa, coffee, palm oil, soy, rubber, wood, and products derived from these materials.
Palm oil, widely used in food (chocolate, margarine, bakery goods), cosmetics (soaps, lotions, makeup), and chemicals (emulsifiers, surfactants), is particularly impacted by this regulation. Companies must ensure their entire supply chain is deforestation-free.
What Does That Mean Exactly?
The EUDR is designed to prevent deforestation linked to products sold in the EU market. Companies must prove that their products do not originate from land deforested after December 31, 2020. To comply, businesses must:
- Trace products to their source and provide precise geolocation data.
- Assess deforestation risk and prove compliance before importing goods to the EU.
- Ensure that every batch of palm oil can be traced back to its plantation.
The regulation aims to reduce global deforestation, lower carbon emissions, promote sustainable supply chains, and establish a global standard for environmental responsibility. However, it also introduces several challenges.
Challenges and Impact
Many small-scale farmers in Indonesia and Malaysia struggle to meet these compliance requirements due to limited resources. While it’s difficult to pinpoint exact figures, only about 19% of global palm oil is certified by the Roundtable on Sustainable Palm Oil (RSPO). However, RSPO certification alone is not enough. A 2020 study found that some certified plantations were established on previously deforested land, raising concerns about the effectiveness of these certifications.
Since even RSPO-certified palm oil must meet additional EUDR requirements, stricter sourcing regulations will likely lead to higher palm oil prices in the EU market. For brands, this means increased compliance and ingredient costs, which may lead to higher product prices. Some companies are already seeking alternatives to palm oil and reformulating products to navigate these challenges.
How Can You Prepare?
To ensure compliance and maintain supply chain continuity, companies should:
- Develop a plan with their team to align raw materials with EUDR requirements.
- Engage suppliers to understand how they are preparing for compliance.
- Limit palm oil use in both existing and new formulations.
- Diversify supply chains by incorporating sustainable, non-agricultural palm oil alternatives.
A Sustainable Alternative: ÄIO RedOil
At ÄIO, we offer a transformative, microbial-based alternative to palm oil and platform chemicals through fermentation. Our innovative process is:
- 10 times faster than traditional palm oil production.
- Uses 90% less water and requires 74–97% less land.
- Reduces environmental impact while supporting a resilient and scalable supply chain.
ÄIO RedOil has a fatty acid profile similar to palm oil and can serve as a building block for palm-based derivatives.
Want to Learn More?
If you’re interested in exploring sustainable raw materials or transitioning away from traditional oils in your formulations, reach out to us! Our team of experts is ready to help you navigate these changes.
Get in touch today!