Posted 28/11/2023

The European Union (EU) has recently passed a regulation to combat deforestation. This requires companies to ensure that the products they source from around the world do not contribute to deforestation or forest degradation.

The regulation requires businesses to undertake due diligence to identify and address any risks of deforestation/forest degradation in their supply chains.

The EUDR represents a material change in position by a regulator with respect to the transparency of some of our biggest globally relevant supply chains.

As the rule came into force on 29 June 2023, companies need to now consider and prepare for the new obligations which will be subject to enforcement from 30 December 2024.

Here are the Top 10 things you need to know.

  1. Potential fines of up to 4% of company’s EU turnover
    In addition to fines, other measures may be taken. This includes the confiscation of products and revenue gained from these items, exclusion from the public procurement process and funding, and with repeated infringements, a ban from dealing in the EU in products covered by the regulation.

  2. Cattle, Cocoa, Coffee, Palm Oil, Rubber, Soy and Wood are subject to the new EUDR
    EUDR also covers derived products; meat products, leather, chocolate, coffee, palm nuts, palm oil derivatives, glycerol, natural rubber products, soybeans, soy-bean flour and oil, fuel wood, wood products, pulp and paper, printed books.

    EUDR applies to goods produced on or after 29 June 2023.

  3. The law applies to recent deforestation
    Operators need to ensure that products entering the EU have not come from land that has been subject to deforestation or degradation since 31 December 2020.
  4. EUDR requires compliance to local ESG laws
    Products must be produced in accordance with local legislation. This extends EU compliance to laws and rules around land use, native title, environment, labour rights, anti-corruption and customs.
  5. Responsibility sits with the company placing the product on the EU market
    After 30 December 2024, any company that wants to sell products in the EU that are covered by the EUDR will need to upload a due diligence statement to the competent national authority. EUDR extends to companies exporting covered products from the EU.
  6. Companies must conduct due diligence (DD) on their supply chains
    The EUDR is prescriptive in the approach to be taken to DD:

    • Information Gathering – companies must know precisely where their products have come from (geolocation coordinates) and how they have been made or produced.
    • Risk Assessment – this information must be considered as part of a risk assessment.
    • Risk Mitigation – depending on the outcome of the risk assessment, companies must take actions to mitigate their risks.Companies must conduct due diligence (DD) on their supply chains
  7. Companies need to establish a DD system
    The EUDR requires companies or operators to establish a DD system. This needs to be reviewed at least annually and the company needs to publicly report as widely as possible, the steps they have taken to establish compliance with their DD requirements.
  8. Expect regular checks and enforcement
    The regulation has gone as far as to set minimum thresholds for competent authorities who have carriage in member states for compliance and enforcement. For example, for high-risk products, a minimum of 9% of operators will be subject to compliance checks.
  9. Technology will be used to confirm provenance of products
    The EUDR specifies that competent authorities are to use any technical and scientific means adequate to determine the exact place where the relevant commodity or product was produced, including chemical and anatomical analysis. Origin or provenance has been identified as a critical tenant to the integrity of these supply chains – verifying origin or provenance of products will be important to ensuring compliance.
  10. Non-compliance with the EUDR precludes access to and export from the EU
    Failure by a company to comply with EUDR means that from 30 December 2024, it will be prohibited from selling covered products on the EU market.

Download our EUDR Guide