EUDR (EU Deforestation Regulation)

The EU Deforestation-free Regulation (EUDR) is the new EU initiative to limit deforestation caused by forestry and agricultural activities worldwide. Applicable from 30th December 2024 (or 30 June 2025 for micro or small businesses), it places new mandatory due diligence requirements for EU businesses. 

The regulation applies to the seven commodities (and products derived from them) which have the greatest impact on deforestation - cattle, cocoa, coffee, oil palm, rubber, soya and wood. These commodities must not have been produced on land that has been deforested after 31st December 2020.

It expands upon the scope of (and will eventually replace), the EU Timber Regulation (EUTR).  

The EUDR applies to ‘operators’ and ‘traders’. 

‘Operators’ are any natural or legal person who first import relevant commodities or products on the EU market, or who export them. They will be required to implement due diligence on their supply chains to ensure they are deforestation and forest-degradation-free.

‘Traders’ are any person other than the ‘Operator’ who make the relevant commodity or product, already present within the EU borders, available on the market. They will also be responsible for checking and storing due diligence information of their operators and supply chain.

In order to sell products into the EU after 30th December 2024, operators must conduct due diligence to ensure that the items are not from land that has been deforested or subject to forest degradation since 31 December 2020. 

To be allowed on the EU market, the relevant product or commodity needs to comply with three main elements:

1. Deforestation-free.
2. Produced in accordance with local legislation (forest and environment related, human rights and labour rights, land-use and rights of indigenous people, or governance-related such as absence of corruption).
3. Covered by due diligence statement: confirm that no or only negligible risk has been found, by providing relevant information as evidence. 

The regulations state that due diligence should consist of three parts:
 

• Information collection – collect and store data to confirm the location and date of primary production, the species, conclusive and verifiable information that the relevant products are deforestation-free, and conclusive and verifiable information that the relevant commodities have been produced in accordance with the relevant local legislation. 
• Risk assessment – verify and analyse information received from the supplier (‘Trader’ or ‘Operator’) and establish the risk of non-compliance with the EUDR for each specific product, at least yearly for their suppliers.
• Risk mitigation – When a risk is identified, additional collection of information is necessary. Independent audits or investigation will be carried out and suppliers engaged (particularly SMEs) through risk management practices, and adequate policies, controls, procedures or investments applied.

Penalties for non-compliance can include fines up to 4% of the company’s EU revenue, on top of confiscation of revenues gained from the sale of the products, and temporary prohibition to place these products on the market.

FSC is issuing in June 2024 an FSC EUDR Toolbox, that will enable companies, “Operators, “Traders’ throughout forest supply chains to meet their EUDR obligations. This will impact FSC Forest Management certification and FSC Chain of Custody certification. FSC Recycled label is exempt as they do not include any virgin forest material.

This new toolbox will include a blockchain for traceability functionality, a Regulatory module to help generate the required due diligence report, and a Risk management framework revised to be EUDR compliant. This last module will upgraded to become FSC Next Generation Risk Assessment tool, covering all EUDR requirements, and become one standardised risk assessment for each prioritised country.