The European Union Regulation against Deforestation (EUDR) sets strict requirements to ensure that products imported into or exported from the European Union do not contribute to deforestation and forest degradation.
The measure entered into force on 10 June 2023 as a transitional period, with final implementation scheduled for 30 December 2024. However, the European Commission has proposed to postpone this date by one year and the final decision now rests with the European Parliament and Council. We at Rhenus will closely follow any new developments on the implementation periods to clarify the final roadmap of this regulation.
Below, we take a detailed and practical look at what the EUDR is so that business owners understand the scope, obligations and actions needed to comply with this regulation and avoid penalties.
1. What is EUDR and how can it affect your business?
The European Regulation on Combating Deforestation has been adopted by the European Union (EU) to reduce the European market's contribution to deforestation and forest degradation on a global scale. This regulation imposes strict restrictions on the import, marketing and export of certain products in the EU, ensuring that these are not linked to deforestation.
The main objective is to minimise the EU's environmental footprint, reduce greenhouse gas emissions and protect biodiversity. For companies, this means reviewing their supply chains and ensuring they comply with these new requirements to avoid penalties and loss of access to the European market.
2. Who must comply with the EUDR?
The new regulation affects several categories of actors in the European market:
- Operators: companies bringing products onto the EU market for the first time or exporting them outside the EU, such as producers, importers and manufacturers.
- Traders: companies that trade products that have already entered the EU market. Although their obligations are less strict than those of traders, they must ensure that products comply with the EUDR.
- Small and medium-sized enterprises: SMEs have a longer transition period until 30 June 2025 to comply with the regulation. However, they must ensure that the products they deal with are covered by a due diligence statement.
3. To which products does the EUDR apply?
The EUDR applies to a specific list of raw materials and derived products associated with deforestation, including:
- Wood and derived products: both unprocessed, such as furniture, paper and other items made from wood.
- Soybeans: mostly used in animal feed and processed products such as tofu or soymilk.
- Palm oil: found in many foods, beauty and cleaning products.
- Beef and leather: covers both beef and products made from leather, such as handbags and shoes.
- Coffee and cocoa: key ingredients in products such as chocolate and coffee.
- Rubber: used to make tyres and other industrial items such as gloves and rubber bands.
4. What are the requirements for companies?
Companies will need to familiarise themselves with three concepts that will be key to ensuring compliance with the new requirements:
4.1. DUE DILIGENCE STATEMENT
This is an official declaration that companies must submit to certify that they have carried out their due diligence and that the risk of deforestation associated with their products is ‘negligible’. This means that, after conducting a thorough risk assessment, the company has determined that there is little or no risk that the products they are placing on the EU market are linked to deforestation or forest degradation.
The Due Diligence Declaration shall include the following information:
- Operator details, including EORI number for imports and exports.
- Details of the batch of raw materials or products traded, such as H.S. Code, product description, weight or volume.
- Country of production information and exact coordinates of the production location.
- Reference number of previous DDD, if any.
4.2. DUE DILIGENCE SYSTEM
It is the framework that companies must implement to comply with the EUDR. This system includes several steps:
- Information gathering: companies must obtain detailed information on the origin of products, including the location of the plots of land where they are grown or produced, information from suppliers and any relevant certifications that guarantee sustainable practices.
- Risk assessment: Once information has been collected, companies need to assess the risk of their products being linked to deforestation. This involves looking at factors such as geographical location, the area's history of deforestation, and any evidence of unsustainable practices.
- Remedial action: If the risk assessment identifies a risk of deforestation, the company should take steps to mitigate it. This may include changing suppliers, applying for additional certifications, or implementing stricter supply chain control practices.
4.3. Transparency and traceability
Companies must keep detailed records that allow products to be traced from their point of origin to their final destination in the EU. This is crucial not only to ensure compliance with the EUDR, but also to provide evidence in case of audits or inspections by authorities.
These records should incorporate:
- Documentation of origin: information on the farm or plantation of origin, geographical coordinates, and date of production.
- Chain of custody: details of each step in the supply chain, including intermediaries and transporters.
- Certifications and verifications: any sustainability certificates or independent audits that can support compliance with the EUDR.
5. What happens if you do not comply with the EUDR?
- Fines: up to 4% of the previous year's EU turnover.
- Confiscation of products: non-compliant goods may be confiscated and profits generated may be withheld.
- Market exclusion: temporary ban on participating in public procurement or receiving government funding.
- Trade ban: temporary prohibition to trade non-compliant products within the EU.
6. What are the first steps in adapting to the EUDR?
Companies should anticipate the entry into force of the regulation and act quickly to ensure compliance with the EUDR:
- Implement a reporting and due diligence system: ensure that your company has a robust system in place to collect and manage the necessary information.
- Consult experts and legal advisors: if necessary, seek professional advice to ensure that all aspects of your supply chain and operations are aligned with EUDR requirements.
- Make sure your logistics operator is aware of the regulation: rely on a logistics partner with experience in customs regulation and who is aware of all the details of the new regulations to avoid unforeseen events that can have a direct impact on your goods.
Do you want more information?
- Original text of the regulation published in the BOE.
- Summary of the regulation by the Ministry for Ecological Transition and the Demographic Challenge.
- Frequently asked questions document prepared by the European Commission and translated by the Ministry for Ecological Transition and the Demographic Challenge.
Rhenus Group professionals are prepared for the final entry into force of the EUDR regulation and are at your disposal to answer any questions and help your company respond to the new requirements. Contact our team of customs experts!