The aim of the EU Regulation on deforestation-free products, which came into force at the end of June 2023, is to reduce the flow of products into the EU market that are linked to deforestation, forest degradation and violations of the relevant laws and regulations of the country of origin.
EUDR has set a sprint in the history of EU regulations – and was then slowed down
After years of work by political groups and stakeholders - and not least thanks to the successful Europe-wide #TogetherforForests petition - the EU Commission presented a draft law on deforestation-free supply chains in November 2021.
Both the EU Council and the EU Parliament officially voted positively on this text, so that the law came into force at the end of June 2023. Originally, companies were required to implement the requirements by the end of 2024. However, the implementation deadline, originally set for the end of 2024, was postponed in December 2024 to the end of 2025. But this implementation deadline was also postponed by another year to the end of 2025 via Amending Regulation (EU) 2025/2650. In addition, further amendments to the regulation – including new roles and obligations for actors in the supply chain – were introduced. Consequently, the current implementation deadline for large and medium-sized enterprises is December 30, 2026; small and micro-enterprises have an additional six months. A review of the regulation is scheduled for 2030 to determine whether, for example, additional products or ecosystems will fall under the scope of the EUDR.
The stricter EUDR replaces the EU Timber Regulation (EUTR)
The EUDR will replace the EU Timber Regulation (EUTR), which came into force in 2010. The EUTR banned the import of illegally produced timber or timber products into the EU and their production in EU countries for the first time. Importers were obliged to provide evidence of the legally harvested timber by means of a due diligence obligation. The EUTR was an important first step towards reducing the risk of importing illegal timber products.
What is the EUDR about?
The regulation on deforestation-free supply chains is known as the EUDR (EU Deforestation Regulation). EU Regulation 2023/1115, which prohibits the trade of raw materials and products that cause deforestation and forest degradation, came into force on June 29, 2023. Specifically, the EUDR concerns the commodities beef, soy, palm oil, timber, wood, coffee, cocoa and natural rubber. The regulation affects both the import and export of these commodities and their products to the EU market.
An elementary aspect of the EUDR is that not only illegal deforestation is excluded, but deforestation in general, i.e. also deforestation that would be legal in the country of production. Per definition deforestation-free products are those that are produced on areas that were not deforested after December 31, 2020, or for which no forest degradation has taken place after December 31, 2020. Forests are defined according to the official FAO definition. The product must also have been produced in accordance with the relevant legislation of the country of production - including environmental, human and labor rights. Possible land rights of indigenous peoples and local communities on the production areas must be identified and their consent clarified by means of free, prior and informed consent (FPIC) if necessary.
The EUDR deals with these risk resources
Understanding Company Obligations and Due Diligence Requirements under the EUDR
When the EUDR refers to “operators”, this means the companies that first place the EUDR commodities or products made from them on the EU market. They are required to fulfill their full due diligence obligations and to demonstrate compliance by submitting a due diligence statement. In addition, they must pass on the assigned reference number of the due diligence statement to the first downstream operator or trader. However, the scope of the due diligence obligation through risk analysis and any mitigation measures always depends on the country of origin of the commodities.
In the case of downstream operators or traders, conducting their own due diligence is not necessary. However, they must possess information regarding the identity of their suppliers and their corporate customers for the goods they trade on the EU market. If their supplier is an operator, they must also have the reference number of the due diligence declaration on hand. All stakeholders must store the information collected for five years.
Important: Every company is responsible for the due diligence statement, whether they carry out the declaration themselves or it has been passed on to them.
The EUDR introduced the so called country benchmarking. Based on assessment criteria that take into account quantitative, objective and internationally recognised data, a distinction is made between countries with a low, normal or high risk. The European Commission has classified four countries as high risk: Russia, North Korea, Myanmar and Belarus. Germany and all other EU Member States have been classified as low-risk, and all countries not listed in the annex to the benchmarking are classified as normal-risk.
Depending on the classification into one of the three risk levels – low, normal or high – the extent of the checks carried out by the authorities is to vary accordingly. For businesses, the requirements only change if they source commodities from a low-risk country: in that case, they must carry out a less extensive risk assessment – but the requirement to have precise knowledge of the goods’ origin and the associated exclusion of deforestation and illegal practices remains.
In a three-stage due diligence process, operators must carry out due diligence in accordance with the EUDR. Only when a company has concluded that there is no or only a negligible risk of deforestation the company will be allowed to place the product on the Union market or to export it.
The first step of the due diligence process is collection of information, which is mandatory for all operators. In addition to the description of the commodities, the origin of the commodities must be explicitly stated, for example by using geo-coordinates. Furthermore, there must be sufficient information that the goods have been produced without deforestation and in accordance with the relevant legal provisions of the country of origin.
The second step of the due diligence process involves a comprehensive risk assessment for all operators who source commodities from countries classified as normal or high risk. They must check the commodities on various criteria, including concerns regarding the non-compliance of the commodities with the EU regulation. It is not required to this extent if the commodities originate from a low-risk country.
However, two criteria must also be assessed in the case of low-risk countries: the complexity of the supply chain and the risk of circumvention and adulteration. If there are generally valid indications that the goods may not be EUDR-compliant, a full risk assessment is required even for commodities from low-risk countries. Any information suggesting that the commodities may not comply with the requirements set out in the Regulation must be investigated. The risk assessment must conclude that there is no risk of deforestation, or only a negligible risk. If the risk assessment has identified that there are risks of deforestation, risk mitigation measures must be implemented as a third step. This may involve requesting further information or documentation, collecting data independently, carrying out on-site checks, or supporting producers in implementing the EUDR. This requires a comprehensive risk management system equipped with appropriate strategies and control procedures for risk mitigation. Operators must also be able to provide evidence of annual independent audits.
Once risk mitigation measures have been implemented and the risk has been reduced to a negligible level, the due diligence statement can be submitted and the commodities placed on the EU market.
The due diligence arrangements must be documented, reviewed annually and, where necessary, adapted.
The EUDR is to be reviewed by the EU Commission in 2030 to assess its effectiveness and, if necessary, amended
In 2030, the European Commission must set out, in an impact assessment, whether the Regulation should also apply to ecosystems falling under the FAO definition of ‘other wooded land’ – thereby protecting further biodiverse and vulnerable landscapes from deforestation for EU consumption. In addition, the review will examine whether other ecosystems, such as savannahs, wetlands and peatlands, should be protected under the regulation. The inclusion of additional high-risk raw materials and products, such as maize or biofuels, will also be assessed. Furthermore, the Commission will examine by that time whether financial institutions should also be held accountable under the EUDR. In this way, it aims to prevent the financial sector from further fuelling deforestation through loans and investments in companies that damage forests.
As part of this first general review, a report on the regulation’s impact on producer countries – and in particular on small-scale producers, as well as on indigenous peoples and local communities – is also to be submitted to the European Parliament and the Council. It will also examine whether additional trade facilitation measures are needed for producer countries. Another important aspect will also be addressed in the first general review: the potential shift in trade flows, which could indicate attempts to circumvent the rules.
Questions about the topic?
Nathalie Schynawa
+49 228 24290-40
nschynawa[at]oroverde[dot]de
Photo credits: Center for International Forestry Research - Wildscreen Exchange (Title, Road through rainforest), iStock/cnOra Shutterstock: AlexandrosMichailidis (EU Flag), OroVerde - E. Mannigel (Deforestation in the rainforest for agriculture, coffee cherries, rubber), IStock (cattle), OroVerde - ND (Soya), pxhere (Palm oil), OroVerde - I. Naendrup (Wood), OroVerde - H. Mennigen (Cocoa)
