European Union Deforestation Regulation (EUDR)
What is the EUDR?
The European Union Deforestation Regulation (EUDR)* is a regulation aimed at combating deforestation and forest degradation linked to specific commodities and products. This regulation is set to have a far-reaching impact by covering the entire value chain.
The implementation of the EUDR is scheduled and impacts Large and Medium Enterprises first, with SMEs following next year.
*https://environment.ec.europa.eu/topics/forests/deforestation/regulation-deforestation-free-products_en
Commodities and products in scope
The EUDR has a focus on commodities that have been identified as major drivers of deforestation worldwide. These commodities include cattle, cocoa, coffee, oil palm, rubber, soya, and wood.
It's important to note that the regulation extends beyond the raw materials; it also encompasses a range of notified by-products to ensure a full value chain approach. Here are some examples:
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Cattle: Live cattle, meat (fresh or chilled), edible offal, raw hides, and tanned leather.
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Cocoa : Cocoa beans (whole or broken, raw or roasted), cocoa shells, and chocolate preparations.
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Wood: Includes fuel wood, wood charcoal, wood in the rough, and processed wood.
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Coffee: Coffee beans (roasted or unroasted), ground coffee, instant coffee, and coffee extracts.
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Palm Oil: Crude palm oil, refined palm oil, palm kernel oil, and derivatives such as margarine.
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Soy: Soybeans (whole or crushed), soybean oil (crude or refined), and soy-based food products.
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Rubber: Natural rubber (latex or solid), rubber sheets, tires, and other rubber-based products.
These inclusions ensure that the EUDR addresses deforestation risks across the entire supply chain, from primary production to finished goods.
A complete list of commodities and their corresponding products can be found in the EUDR documentation and Appendix.
Who is affected by the EUDR?
The EU Deforestation Regulation (EUDR) affects all companies involved in importing, exporting, producing, or distributing commodities linked to deforestation within the EU market.
This includes businesses of all sizes, both within and outside the EU, across various sectors such as manufacturing, wholesale, retail, and online sales.
Operators vs. Traders
Operators are entities that place relevant commodities or products on the EU market for the first time or export them from the EU. They bear significant responsibilities under EUDR, including conducting due diligence and submitting declarations to prove compliance.
Traders, on the other hand, resell these products within the EU without introducing them to the market for the first time. While traders have fewer obligations, they must maintain records and ensure product traceability.
The EUDR Risk Assessment Framework
The EU Deforestation Regulation (EUDR) uses multiple risk assessment frameworks to address deforestation risks and supply chain challenges. These frameworks categorize countries and regions as low, standard, or high risk, enabling targeted enforcement and simplified due diligence for low-risk areas.
Deforestation Risk
Involves determining the risk level of the country of production and the rate of illegal production of the relevant commodity within that country. It also includes verifying whether the supplier in the country of origin meets compliance standards.
Geolocation Risk
This assessment focuses on the physical or chemical transformation of raw materials during production. The raw material locations need to be verified.
Supply Chain Risk
Considers factors such as the number of intermediaries involved, the producer’s awareness and training regarding EUDR requirements, and the producer’s track record in deforestation or forest degradation.
Due dilligence and reporting
The due diligence process is a core component of the EUDR, requiring operators to engage with suppliers, assess their practices, and gather detailed information about their production.
Key steps, amongst others, include:
- Supplier Engagement and Assessment
- Source Geolocation Verification
- Producer Information Collection
- Production Calendar Creation
EUDR-compliant Due Dilligence Statement
Operators must generate an EUDR-compliant Due Diligence Statement (DDS), which is loaded into the EUDR Information System (EUDR-IS).
The EUDR-IS serves as the central hub for managing and processing data related to the regulation. The DDS provides a confirmation that operators have taken the necessary steps to ensure that their products comply with the EUDR, contributing to the overall goal of combating deforestation.
The EUDR process flow
Implementation timeline
The implementation of the EUDR is being rolled out in phases:
- The regulation has already entered into force for large and medium-sized companies.
- After a one-year delay, the first wave of EUDR is set to fully hit by the end of 2025.
- Following this, the regulation will apply to micro and small enterprises in 2026.
This phased approach allows businesses of different sizes to adapt gradually. The EUDR development is aligned with pilot customers, and its combination with CSRD and/or VSME is natural. Early production of MVP (Minimum Viable Product) is derisking trajectory.
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This guide not only provides insights into EUDR and its relationship with CSRD, but also presents an integrated software solution designed to outperform industry standards.
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