How can the EU Deforestation-free Regulation be implemented and complied with?

This guide will provide you with all the information you need to achieve EUDR compliance in the most efficient way, giving you a competitive advantage in your market segment.

EUDR has what it takes to bring tangible improvements to supply chain sustainability. Each company plays a leading role in helping fight deforestation and, along with it, climate change and biodiversity loss.

What is the EUDR?

The EU Deforestation-free Regulation (EUDR) is a policy framework to address and mitigate the environmental impacts of deforestation. It is an integral part of the EU Green Deal and is in line with the broader EU strategy to protect forests worldwide.

The regulation sets out criteria for which products can be classified as deforestation-free and requires companies to implement sustainable sourcing practices and traceability measures to ensure that their supply chains do not contribute to deforestation. By promoting transparency and accountability in the production of key commodities, the EU aims to reduce pressure on forests and protect biodiversity.

The affected commodities listed in the new regulation and the corresponding products may only be placed on the market, made available or exported if they meet the requirements.

EUDR requirements

  • Deforestation-free: Their production did not cause deforestation or forest degradation after 30th Dec 2020, regardless of whether the deforestation or forest degradation was legal according to the applicable legislation in the country of production.
  • Legally produced: Their production occurred in accordance with relevant legislation of the country where the production took place.
  • Due diligence: They are covered in a due diligence statement, that is based on a due diligence risk assessment, to be shared with authorities.

The role of forests and the introduction of the EUDR

Forests offer a large range of environmental, economic and social benefits that are fundamental for human life. They protect entire ecosystems, provide clean air and prevent biodiversity loss, also playing a vital role in water purification and storage and in supporting the lives and economies of a large part of the global population.

The destruction of forests contributes significantly to the climate crisis, reduces carbon sinks, affects the water cycle and threatens the livelihoods of communities, including indigenous peoples and local communities.

This phenomenon is taking place at an alarming rate. According to the Food and Agriculture Organization of the United Nations (FAO), around 420 million hectares of forest between 1990 and 2020 – an area larger than the European Union – has been lost worldwide. On top of that, due to increases in global consumption, the deforestation rate is expected to rise even further in the upcoming years. As one of the world’s largest consumers of raw materials, the European Parliament took up the challenge of regulating the commercialisation of products associated with deforestation by extending the already-enforced EU Timber Regulation (EUTR), whose focus was to ensure the legal harvest of timber products on the EU market, to other products like palm oil, soy, cocoa, coffee, cattle and rubber, and require deforestation-freeness additional to legality.

This marked the birth of the EU Deforestation Regulation (EUDR), with the aim to reduce the impact of products purchased by Europeans on the world’s forests and wooded areas, ultimately cutting down greenhouse gas emissions and biodiversity loss.

Who is affected by the EUDR?

The EU Deforestation-free Regulation (EUDR) affects companies that import to, place on, make available on or export from the EU market specific commodities – also referred to as “relevant commodities” and “relevant products” in the next paragraphs – such as coffee, cocoa, rubber, cattle, wood, palm oil, soy and their derivatives, regardless of the EU or non-EU origins of the material. This includes both EU-based and international companies and applies to all sales channels, including online retail, from the moment a product enters the market to the moment it is delivered to the final consumers. The regulation distinguishes between “operators” who place these products on the EU market for the first time, and “traders” who resell the products. Both groups must meet certain requirements in order to comply with the EUDR guidelines.

Who are the operators?

An “operator” is defined in the EUDR as any natural or legal person who places on the EU market or exports from it relevant commodities or products in the course of a commercial activity. Here, placing on the market means the first making available of a relevant product on the EU market.

Some more context is offered by the EU Frequently Asked Questions, according to which any person who sells, gives away, processes, distributes to commercial or non-commercial consumers or uses relevant products in their commercial activity is subject to due diligence obligations and must submit a due diligence declaration. A company is considered an operator if it sells products that have not undergone due diligence at an earlier stage of the supply chain.

The definition includes not only importers to the EU market and exporters from the EU market, but also companies that transform a relevant product with a certain HS code into another product with a different HS code, and offer it on the market for the first time. For example, a company that imports cocoa butter and another company that uses that cocoa butter to produce chocolate and places it on the market would both be considered operators.

Who are the traders?

A “trader” is defined in the EUDR as any person in the supply chain, apart from the operator, who makes the relevant products available on the EU market in the course of a commercial activity. This provision can be made both in return for payment and free of charge and includes distribution, consumption, or use on the market.

Traders are therefore actors in the supply chain who resell or distribute relevant products without having previously placed them on the market. For example, a company that buys chocolate from an EU-based producer and sells it on to retail chains without further processing it would be a trader under this definition.

Obligations and exceptions

The EU Deforestation-free Regulation (EUDR) sets different requirements for operators and traders based on the size of their business. Companies are classified as micro, small or medium-sized enterprises (SMEs) in accordance with Directive 2013/34/EU, depending on criteria such as balance sheet total, net turnover and number of employees. Companies that exceed the thresholds related to these the criteria fall under the category of large companies. Operators and non-SME traders are required to review their supply chains to eliminate deforestation and unlawful practices by collecting information, assessing risks and submitting a due diligence statement. However, SME traders are only required to store certain information and share it upon request.

The EUDR creates a benchmarking system by the EU Commission that classifies countries into three categories according to the risk of deforestation, which influences the due diligence requirements. Simplified due diligence applies to products from low-risk countries, while stricter requirements apply to high-risk areas.

SMEs enjoy exceptions. They do not have to submit a due diligence declaration for products that are already covered by one from another market participant, but only have to show the reference number of the due diligence statement if required. Similarly, non-SMEs traders can invoke the due diligence obligations of previous market participants in the supply chain and must provide corresponding reference numbers for product batches that have already been inspected. In both cases, effective data management is essential to be able to demonstrate compliance.

In scenarios where a company acts as both an operator and a trader, such as a coffee company that both imports beans and resells roasted beans from an EU roaster, specific obligations arise from the EUDR. The steps for compliance are as follows:

  • The company must submit a due diligence statement for the imported coffee beans.
  • It must collect relevant information about the transactions with the EU roaster and pass this on to the other links in the supply chain or to the competent authorities on request.

When does the EUDR come into force?

The predecessor of the EUDR was the EU Timber Regulation (EUTR), which came into force 11 years ago, on March 3, 2013, and will be repealed by the EUDR.

Following a recent study on the products with the greatest impact on deforestation and forest degradation, the EU decided to extend the scope of the EUTR to other products and to add freedom from deforestation as an additional core requirement for legality.

The first proposal for the EUDR was adopted by the European Parliament in 2022 and came into force on June 29, 2023. However, implementation by the EU member states will not take place until December 30, 2024.

Small and micro enterprises are given a longer adjustment period. They have until June 2025 to adapt to the requirements.

The new legislation will be fine-tuned before the end of June 2024. The EU will issue a document with guidelines for implementation and an impact assessment confirming or rejecting the impact of the regulation on other products.

The policy should be reviewed by end of June 2028 and then every five years to identify any issues or potential improvements.

Do you have questions about EUDR? We are here to help!

If you are affected by the EUDR and need a simple and, above all, cost-effective solution for compliance, please contact us. We would be happy to introduce you to RADIX Tree and your options with this affordable but powerful tool.

To which products does the regulation apply?

The EUDR and its amendments target a wide range of raw materials and products derived from them. They are referred to in the official text as “relevant commodities” and “relevant products”. The former are the raw materials that the EU considers to have the greatest impact on deforestation and forest degradation.

All Products which affected from eudr.
  • Palm oil
  • Soy
  • Wood
  • Cocoa
  • Coffee
  • Cattle
  • Natural rubber

The latter are the goods that are fed with or produced from the raw materials concerned. Some examples of possible combinations of relevant commodities and products are cocoa beans and chocolate, cattle and leather, palm oil and glycerol, as well as wood and paper.

As not all goods are affected by the regulation, it is important to check the tariff classification of the products to determine whether they fall under the EUDR. The full list can be found in Annex I of EUDR.

The regulation does not apply to goods that have been manufactured entirely from materials that would have been disposed of as waste and are therefore fully recycled. If the goods instead contain 80% recycled and 20% virgin raw materials, companies are subject to the due diligence obligation for the 20% virgin raw materials, but they must also be able to demonstrate that the remaining 80% is made from recycled material.

All Products which affected from eudr.

What do impacted companies need to do?

The EUDR requires companies to ensure that goods that have been deforested or degraded after December 31, 2020 are not placed on the European market. Companies must demonstrate compliance with the EUDR through due diligence and establish that there is no or only negligible risk.

A due diligence system consists of three parts:

  • information gathering – collecting data on the supply chain of your products, including information on the geographical location and period of primary agricultural or forestry production.
  • risk assessment – evaluation of the information collected to assess the risk that the concerned products are associated with deforestation, forest degradation or illegality – including human rights.
  • risk mitigation – reduction of non-negligible risk. Measures could include obtaining further information, independent surveys, laboratory analyses or field audits.

A benchmarking system operated by the Commission identifies countries with a low, normal or high risk of producing raw materials or products that are not deforestation-free or do not comply with the legislation of the producing country.

The obligations for operators and authorities will vary depending on the risk level of the country or region of production, with simplified due diligence obligations for products from low-risk areas and stricter obligations for products from high-risk areas.

Penalties imposed by the EUDR

The EU authorities also require organised inspections to deter violations, and if the companies subject to the regulation are found guilty, they will face different penalties depending on the local regulations outlined by each country.

Penalties may include one or a combination of the following measures:

  • Maximum fines of at least 4% (the member state might also decide to increase the maximum fine) of the total annual turnover in the last financial year (the decision should take into account the environmental impact and the value of the goods concerned).
  • Confiscation of the goods in question and the revenue generated by their trade.
  • Exclusion from public procurement and public funding for a maximum period of 12 months.
  • Exclusion from the European markets for the goods and products concerned in the event of serious infringements.
  • Prohibition of applying the simplified due diligence in the event of serious or repeated infringements.

How can we help you comply with the EUDR?

We have used our extensive knowledge of regulatory requirements and global traceability to provide our customers with a next-generation platform with numerous functions and automation options.

RADIX Tree is an end-to-end solution that supports you throughout the entire compliance process with a comprehensive range of services. This tool automates large parts of the data collection and reporting for the EUDR. It also contains templates and information on which documents are required for the respective situation, which reduces the effort and costs for the operator.

RADIX Tree is the smart tool that minimizes your financial impact from EUDR, as we offer service packages that can be individually expanded and customised.

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Questions and answers on EUDR

We have compiled the most frequently asked questions and answers about the EUDR.

Market participants must provide evidence that their products are deforestation-free. The EU Commission has not yet specified what the proof must look like. Possible elements are::

, The supply chain is traced back to its origin using geolocation information. Images taken before and after the extraction of raw materials are compared.

Primary producers report directly using mobile digital technology.
Farmers take photos of the replanting of trees after the extraction of raw materials (geotagging or photometric data enable the time and location to be recorded).

Once adopted, each Member State will be responsible for the enforcement of the Regulation by the competent national authorities. Companies are monitored and held accountable if they do not comply with the requirements of the regulation.

Companies must submit a declaration in a European information system in which they confirm that they have successfully exercised due diligence and that the products they place on the market comply with EU regulations.

The proposal provides for a minimum level of control, which may be higher in the case of high-risk countries, deterrent sanctions, a mandatory exchange of information between customs and other authorities and an obligation for enforcement authorities to respond to substantiated concerns from civil society. Member State authorities will be able to use a new digital system that centralizes relevant information on goods and products placed on the EU market, such as geographical coordinates and country of production, to increase the effectiveness of policies.