An Overview of the EU Deforestation-free Regulation (EUDR)

This ban on deforestation-linked goods is also expected to reduce emissions of greenhouse gases and conserve biodiversity. The following blog post will explain what is the EU Regulation on Deforestation-free Products (EUDR) and for further information on recommendations for compliance, get your copy of the extended guide on How to Comply with EUDR.

Overview of the EUDR

What is the EUDR about?

The main goal of the EU Deforestation-free Regulation is to ensure that the production of certain goods and commodities will not contribute to further degradation of forest ecosystems. This is also expected to reduce emissions of greenhouse gases and conserve biodiversity.

Operators and traders will only be allowed to sell products in the EU if the supplier of the product has issued a so-called “due diligence statement”. Having stringent due diligence in place is needed to confirm that the product does not come from deforested land nor has led to forest degradation, including of irreplaceable primary forests.

Companies will also have to make sure and verify that these products comply with relevant legislation of the country of production including human rights and that the rights of affected indigenous people have been respected.

Who is impacted?

All operators and non-SME traders placing on or exporting from the EU market the following commodities: Soy, beef, palm oil, wood, cocoa, coffee, rubber, as well as some of their derived products, such as leather, chocolate, tires, or furniture will be impacted by this act.
The Regulation thus impacts the textile industry in the context of the use of leather and rubber.

Note: A review will be carried out in two years (2025) to see if other products need to be covered by the obligations. The list of commodities will also be reviewed on an ongoing basis.

What are the critical dates to remember?

On June 29th 2023, the Regulation entered into force.
Operators and traders have 18 months to abide by the new obligations, which leaves them until December 30th 2024. The Commission will then present its risk classification of countries based on an objective and transparent assessment.
Around June 29th 2024, the European Commission will publish an impact assessment on the potential extension of the scope of the Regulation to other products.
On 30th June 2025, SMEs will also be subject to the obligations

at least 4%
of the total annual turnover in the EU of
the non-compliant operator or trader could be fined.

Requirements

Under the Regulation, operators and traders who place on or export from the EU market one of the commodities in scope, must be able to prove that this commodity does not originate from a deforested land.

For Operators and Traders

Relevant commodities and products may be placed or made available on the EU market, or exported from the EU market only if all the following conditions are fulfilled:

The commodities are deforestation-free. Meaning that they were “produced on a land that was not subject to deforestation after December 31^st 2020”
The commodities have been produced in accordance with the relevant legislation of the country of production.
The commodities are covered by a due diligence statement, which is submitted to the competent authorities.

This also implies that operators and traders will be required to trace the products that they are selling back to the plot of land where it was produced.

What is the Due Diligence Statement?
For a commodity to be accepted, its due diligence statement shall contain:

A description of the commodity, including the quantity and the country of production.
The disclosure of the plot of land where the commodity was producted, with geo-location information.
The date or time range of the production on the specific plot of land.
Information and identification of suppliers, traders and businesses in the supply chain of that commodity.

Small-sized operators will have the possibility to rely on larger operators to prepare their due diligence declarations.

For Member States

Member States shall designate one or more competent authorities responsible for carrying out the obligations arising from this Regulation.

Compliance Checks and Controls:
The designated authorities will be required to carry out checks within their territories to establish whether operators and traders comply with this Regulation. The checks shall include:

An examination of the operator and trader’s due diligence system, including risk assessment and mitigation procedures.
An examination of the due diligence statement related to the specific relevant product, containing the documentation proving that it complies with this Regulation.
In case the above examination raised questions or doubts, the authorities with the required expertise will have access to pertinent data submitted by business, including geolocation coordinates, and utilize satellite monitoring equipment and DNA analysis to verify the origin of goods.

Risk-based Controls: A more tailored procedure

By 18 months after the entry into force (December 2024), the Commission will issue a categorization of countries or regions based on their risk of deforestation. After conducting an objective and transparent assessment, they will be considered either low-risk, standard-risk, or high-risk.

A simplified due diligence process will be applicable to products originating from countries or regions categorized as low-risk.

The proportion of checks performs on operators will also vary according to the countries’ risk level: 9% for high, 3% for standard, and 1% for low risk level.

Consequences

Penalties for non-compliance will be proportionate and dissuasive and the maximum fine must be at least 4% of the total annual turnover in the EU of the non-compliant operator or trader.

Recommendations for EUDR Compliance

To sell products made from commodities that come from forested lands, the seller must be able to show valid and verified evidence of the original plot of land which the raw materials have been harvested from. This can be done with documentation such as a due diligence statement from the supplier.

We recommend having a digital transparency and traceability platform in place where you can link due diligence documentation to suppliers, facilities, and products easily, and retrieve it on demand.Get your copy of the detailed guide on How to Comply with EUDR.

How TrusTrace can help

TrusTrace offers digital traceability and compliance data management solutions that streamline, structure and store supplier declarations, scope certifications and due diligence reports with less clicks in a single digital place. Learn more about TrusTrace products.

Book a demo to find out more about how TrusTrace can support you with due diligence and certification collection upstream of your value chains.

Last Updated: This article was updated on 29 September 2023 with clarifications to the who is impacted, important dates and requirements.