European Deforestation Regulation – EUDR

Over the past decades, many countries have undertaken substantial initiatives to combat deforestation. Despite these efforts, deforestation and forest degradation persist at a concerning pace, accounting for over 10% of global greenhouse gas emissions. The European Deforestation Regulation (EUDR) signifies a crucial turning point in the global campaign against deforestation.

What is the European Deforestation Regulation?

The European Union is a prominent economy and consumer of goods tied to deforestation and forest degradation. The EU recognizes the issue and wants to lead the way to tackling it. Accordingly, on June 9, 2023, the European Union released Regulation (EU) 2023/1115 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation. The regulation, also known as the European Deforestation Regulation (EUDR), aims to ensure that the products consumed by EU citizens do not contribute to deforestation or forest degradation globally.

Like other EU sustainability regulations, such as the Corporate Sustainability Reporting Directive (CSRD), the EUDR seeks to establish Europe as a sustainability frontrunner and to execute the European Green Deal.

What is the Purpose of the EUDR?

The EUDR aims to decrease the EU’s global deforestation impact by encouraging using deforestation-free products. Consequently, this initiative lowers greenhouse gas emissions and curbs biodiversity loss.

In other words, the purposes of this regulation include:

Preventing in-scope products purchased, utilized, and consumed by Europeans from causing deforestation and forest degradation within the EU and worldwide
Decreasing carbon emissions resulting from EU consumption and production of relevant products by a minimum of 32 million metric tonnes annually
Addressing all deforestation and forest degradation linked to agricultural expansion for the covered commodities production.

What Products Does the EUDR Cover?

The European Deforestation Regulation applies to seven primary commodities:

Cattle
Wood
Coffee
Cocoa
Soy
Palm oil
Rubber

It also concerns products derived from these seven commodities, listed in Annex I. These include:

chocolate,
leather,
tires,
paper, and
furniture.

Notably, the regulation doesn’t pertain to products made entirely from materials that have finished their life cycle and would otherwise be considered waste.

Surprisingly, any material solely utilized as packaging material to support, protect, or transport another product is out of the scope of the regulation unless it is placed on the EU market independently as a product.

What is the EUDR Effective Date?

The EUDR became effective on June 29, 2023. Starting this date, operators and traders have 18 months (until December 30, 2024) to adhere to this regulation. Micro and small enterprises benefit from an extended adaptation period (June 30, 2025) and other specific exemptions.

What are the Obligations of Operators and Traders?

According to the regulation, any operator or trader distributing the in-scope commodities within the EU market or exporting them must demonstrate that the products are not sourced from recently deforested areas or have played a role in forest degradation.

In other words, to sell or export the in-scope products, they must meet the following criteria:

Being deforestation-free,
Complying with the laws of the country they were produced, such as land use rights, environmental protection, forest-related rules, human rights, etc., and
Being covered by a due diligence statement showing no or only negligible risk of non-compliance.

We can give you advise and audit your supply chain on your behalf. Ask Enviropass for a free consultation today!

Due Diligence

Operators must employ due diligence procedures. These involve:

Gathering the necessary information, data, and documents to demonstrate compliance with the specifications outlined in the EUDR;
Risk assessment measures; and
Risk mitigation measures.

Risk Assessment

Based on the information and documentation gathered, the operator should conduct a risk assessment to assess non-compliance risk. For placing the products on the market or exporting them, the result should show negligible to no risk of non-compliance.

The risk assessment considers various factors, including:

country of production,
presence of forests and indigenous peoples,
consultation with indigenous peoples,
deforestation rates,
reliability of information,
legal concerns,
supply chain complexity, and
potential for regulation circumvention.

Moreover, operators must document and review the risk assessment measures annually, providing them to authorities upon request. They should also show how they checked the gathered information against the risk assessment criteria and determined the risk level.

Risk Mitigation

In cases of a non-negligible risk of non-compliance, the operator should implement measures to reduce the risk to a negligible or nonexistent level. Risk mitigation measures could involve:

Gathering additional information, data, or documents;
Conducting independent surveys or audits; or
Employing other methods to fulfill the requirements.

Operators must keep records of decisions regarding risk mitigation procedures and measures, review them annually, and provide them to competent authorities upon request. Furthermore, they should be ready to demonstrate how they made these decisions.

What are the Penalties of Non-Compliance?

According to the EUDR, Member States define penalties for violating the regulation. The penalties encompass fines based on environmental damage and the value of pertinent commodities or products. Penalties may also include confiscation of products and revenues, temporary prohibition from market access or export, and temporary exclusion from public procurement.

Implementation

The EU continues collaborating with partner countries and corporations to facilitate a smooth transition towards deforestation-free supply chains. To ensure the efficient execution of the EUDR, the European Commission established the following measures and tools:

Multi-stakeholder platform on protecting and restoring the world’s forests
EU observatory on deforestation and forest degradation
Initiative on deforestation-free value chains

Information system

Do you need to know more about your corporate responsibility towards EUDR? Enviropass is here to help!