Does the New EU Deforestation Regulation (EUDR) impact products you are selling in Europe?

EU 2023/1115  
 
What is the EUDR?         
The European Union Deforestation Regulation is a mandatory law designed to ensure that specific products placed on, made available on, or exported from the EU market are not contributing to global deforestation or forest degradation.

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Who does it affect?
For developers, manufacturers and importers whose products use 'in-scope' commodities, preparing your supply chain and documentation is essential for continued market access.

What Products and Commodities are in Scope?
The regulation applies to seven key commodities and a wide range of derivative products made from them (listed under specific CN/HS codes in Annex I).
Commodities include: Cattle, Cocoa, Coffee, Oil Palm, Rubber, Soy, and Wood.
Examples of Derived Products include: Beef, leather, chocolate, furniture, certain printed paper products such as books and magazines, palm oil derivatives used in various consumer goods, and rubber-based products like tyres and gloves.

Are the packaging and the user instructions of my product included?
Packaging used exclusively to protect or carry another product is generally not covered by the EUDR. This includes things like: The cardboard box a consumer product is shipped in. Wooden pallets or crates used for transport, as long as they are not the product being sold. Packaging in a closed-loop system (e.g., reusable pallets). User manuals, assembly instructions, or warranty cards that simply accompany the main product shipment are typically not covered by the EUDR, as they are not the primary product being placed on the market.

When Does It Take Effect?
The regulation entered into force in June 2023, but the main compliance deadlines for mandatory due diligence are phased:

• Large and Medium Enterprises: 30 December 2025
• Small and Micro Enterprises: 30 June 2026

Note that the enterprise size relates to the operator or importer (if that differs from the manufacturer).
These above dates are currently under review and it is possible that they will be moved out by 1 year. Check the European Commission's official pages for the definitive final application dates
For an enterprise to be considered small it must satisfy 2 of these 3 requirements:

• Staff Headcount <50
• Annual Global Turnover ≤€10 million
• Annual Global Balance Sheet Total ≤€10 million

What are the Key Compliance Requirements?
Check if any component or material in your product is derived from one of these seven commodities.

To be compliant, your product must meet three strict conditions, which you must prove through a rigorous Due Diligence System:

Deforestation-Free: The product must have been produced on land that was not deforested or subject to forest degradation after 31 December 2020.

Legal Production: The product must have been produced in accordance with all relevant laws of the country of production (including land use rights, labour laws, environmental protection, etc.).

Covered by a Due Diligence Statement (DDS): A formal declaration must be submitted to the EU's Information System (TRACES NT) before the product can be placed on the EU market or exported from it. Note that this submission is waived for small or micro-operator processing a product already covered by DDS. They only need to collect the reference number of the already-submitted DDS from their supplier.

What is the Mandatory Due Diligence System?
Operators (the company first placing the product on the EU market or exporting it) must establish and implement a formal three-step Due Diligence System.

Step 1. Information Collection
Collect, verify, and store information for at least five years, including: Product description (including HS/CN code). Quantity (net mass/volume). Country of production. Geolocation coordinates (latitude and longitude) of the plots of land where the commodity was produced or harvested. Date or time range of production/harvest. Supplier and recipient details. Evidence of legal production.

Step 2. Risk Assessment
Use the collected information to assess the risk of non-compliance (deforestation or illegality). Factors to consider include:

• Country-level risk (to be benchmarked by the EU Commission).
• Supply chain complexity.
• Proximity of the land to protected areas.
• Substantiated concerns about supplier compliance.

Step 3. Risk Mitigation
If the risk is assessed as not negligible, you must take action to reduce it to a negligible level. This may involve:

• Implementing on-site audits or field inspections.
• Switching to more compliant suppliers.
• Using satellite monitoring for verification.
• Contractual clauses with suppliers.

 
The EUDR also introduces a crucial country benchmarking system that classifies countries, or parts thereof, into three risk categories, low, standard, and high, based on their association with deforestation and forest degradation linked to seven key commodities. For countries classified as low risk, operators can implement a simplified due diligence procedure, exempting them from the full risk assessment and mitigation steps, though they must still collect all essential information like geolocation data and submit a Due Diligence Statement.

Share this article with your procurement, sustainability, and legal teams to align on a cross-functional strategy for EUDR compliance. Contact me for further information.