Global Traceability

EUDR – EU Deforestation-free Regulation

What is the new deforestation free regulation and what does it mean for businesses?

 1.  What is the EU Deforestation-free Regulation proposal and why is it important?

The EU Deforestation-free Regulation or EUDR is a 2021 EU Commission proposal, that has since passed the EU Parliament, to establish new measures to limit deforestation caused by forestry and agricultural activities all over the world.

The new regulation will see new mandatory due diligence requirements for EU businesses, massively expanding upon the scope of, and eventually replacing, the EU Timber Regulation (EUTR).

Coffee is one of the commodities under EUDR EU Deforestation-free Regulation

 

Europe is one of the largest importers of commodities linked to deforestation including 50% of the world’s coffee and 60% of all cocoa. These commodities alone accounted for over 25% of global tree cover loss from 2001-2015. With such a significant role in the market, the deforestation regulation aims to reduce the impact of products, bought by EU citizens, have on the world’s forests and woodland areas. It is critical for the route to net-zero and the EU hopes to lead by example, similar regulatory requirements could follow in other markets including the UK.

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2. Who is affected by the EUDR?

Like the 2010 EU Timber Regulation, the EU defines those obligated by the EU Deforestation-free regulation (EUDR) as ‘operators’ and ‘traders’. Operators (companies who first place products in the single market) will be required to implement the due diligence on their supply chains to ensure they are deforestation and forest-degradation-free, while traders will be responsible for storing and sharing information on their supply chain to operators.

Crucially, the EUDR also defines large traders as operators, due to their scale of influence.

It should also be noted that the EU Parliament’s amendment supports adding obligations to financial institutions to perform due diligence on their clients activities.

What products does it apply to?

The proposed deforestation-free regulation targets those commodities, and some of the products derived from them like chocolate, leather & furniture, with the greatest impact on deforestation. 

    The commodities in the EU Deforestation-free Regulation - Coffee, cocoa, soy, palm oil, cattle beef, timber

    Coffee, cocoa, soy, palm oil, cattle (Beef, leather), timber & timber products.

    The EU Parliament’s amendments also include an expanded scope adding natural rubber, maize, sheep, poultry, charcoal and printed paper.

    Have any questions? Let us know!

    If you are affected by the EUDR and need a simple, but above all affordable solution to comply with it, feel free to contact us. We will be happy to introduce you to RADIX Tree and show you around our low-cost, effective solution.

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    3. What do you have to do?

    Under the proposed EU regulation, operator companies are obligated to conduct due diligence to ensure only deforestation-free products are allowed into the EU market. Companies must show that commodities were not produced on any land deforested or degraded after 31 December 2020. Commodities must also have been produced legally.

    A due diligence system involves three parts. 

    1. Information gatheringCollecting data on your product´s supply chain, including the geolocalization and time period of primary production.
    2. Risk assessmentAssessment of the information collected to determine the risk of deforesation, forest degradation and illegality associated with the product.
    3. Risk mitigationActions to reduce non-negligible risks to negligible levels. Actions could include requesting further information, independent surveys, scientific product testing or audits.

    A benchmarking system operated by the Commission will identify countries as presenting a low, standard or high risk of producing commodities or products that are not deforestation-free or in accordance with the legislation of the producer country.

    Obligations for operators and authorities will vary according to the level of risk of the country or region of production, with simplified due diligence duties for products coming from low-risk and enhanced scrutiny for high-risk areas.

    When will it apply?

    The first proposal for the EU Deforestation-free Regulation was passed by the EU Commission in 2022 and has passed the EU Parliament with suggested amendments. The next stage will be for Parliament to negotiate its position with the European Council and Commission. Following their agreement the regulation will become binding law in EU member states. It is possible the regulation will come into effect by 2024.

    What’s new? Is it similar to the old EU Timber Regulation?

    The critical difference between previous timber regulation and the EUDR is the requirement to prove a product is ‘deforestation-free’ and not just sourced legally. This means, for example, a raw material may have been legally harvested in its country of origin according to local laws but could still be considered a high risk of deforestation.

     EU Timber RegulationEU Deforestation-free Regulation
    Product scopeTimber and timber products only

    Timber and timber products, beef, cocoa, coffee, palm oil, soy.

    Possibly natural rubber, maize, leather

    Conditions for importingThe product was proven as negligible risk via a due diligence process.The product has been assessed as having negligible risk due to the due diligence exercised. A due diligence statement must be made available to the competent authorities via an online information system operated by the EU before the products are placed on the market.
    Key info for due diligenceProof of legal harvest based on analysing the risk of timber species used with associated country of origin (through a traceable supply chain)Proof that products are deforestation-free and forest degradation-free, based on the information collected on the orign and the supply chain pathway.
    Due diligence obligationsOperator (first placer of product to EU market)Operator and large-sized traders (traders with 250+ employees)
    Country benchmarking systemNone. Due diligence system (DDS) shall be applied regardless of country of origin.

    Low risk: Simplified DDS (only info gathering)

    Standard risk: all DDS steps, 5% checked by authorities.

    High risk: all DDS steps, 15% checked by authorities.

    CITES speciesProduct can be imported if made of CITES species with CITES certificate.CITES species will still be assessed for deforestation risk.
    FLEGTIf product carries a FLEGT licence, it is considered legal timber and can be imported.FLEGT timber is considered legal but operator is still required to prove product is deforestation-free.

      4. What can we do for you?

       

      Many of our clients ask themselves: How should I master this complexity? How can I play it safe without my process getting out of hand financially or organisationally?

      Here at Global Traceability we have been supporting our clients with timber legality due diligence in compliance with the EUTR since its inception in 2013. We know traceability, we know about reducing risk in the most efficient way.

      We are developing the next generation of compliance management on our RADIX Tree platform for the EU Deforestation-free Regulation.

      RADIX Tree offers all-in-one data and risk management 

      With RADIX Tree, large parts of the data collection and risk assessment for the EUDR is automated. RADIX Tree also answers the frequently asked question of which documents are needed in each situation. All this reduces the effort and costs for the operator. Get in touch with us!

      Supply chain compliance management on the RADIX Tree platform

      User-friendly & customisable

      Collaborate with your supply chain

      Work smart with automated risk analysis

      Affordable to every business

      Get in touch for a free demonstration of RADIX Tree for EUDR compliance

      Send us your email and we’ll get right back to you to book an appointment

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      FAQs on the EUDR:

      > What is verifiable evidence of ‘deforestation-free’?

      Operators will need to provide verifiable evidence of their products being deforestation-free. It is not yet specified by the EU Commission what the evidence will need to be. It could be:

      Satellite images
      Supply chain is traced to origin with geo-localisation information. Images taken before and after extraction of raw material are compared.

      Direct reporting by farmers via mobile devices.
      Farmers take photos of tree re-planting after the extraction of raw material (Geotagging or photo metadata enabled to record date and location).

      > How will the EUDR be enforced?

      Once adopted, each member state will be responsible for enforcement of the deforestation-free regulation through national Competent Authorities. Companies will be monitored and held accountable if they fail to comply with the requirements of the Regulation.

      Companies will need to submit a statement to a European information system confirming that they have successfully exercised due diligence and that the products they place on the market are compliant with EU rules. 

      The proposal sets minimum inspection levels – higher in the case of high risk countries – dissuasive sanctions, mandatory exchange of information between customs and other authorities, and an obligation for enforcing authorities to react to substantiated concerns raised by civil society. Member States authorities will be able to use a new digital system which will centralise relevant information on the commodities and products placed on the EU market, such as geographic coordinates and country of production, with a view to increasing the effectiveness of the policy intervention.

       

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