The European Union Regulation against Deforestation and Forest Degradation (EUDR) represents a significant turning point in global efforts to combat deforestation and promote sustainable management of forest resources.
Adopted by the European Union, this regulation imposes strict requirements on companies that market products or commodities linked to deforestation.
In this article, we'll look at the main requirements of the EUDR and how companies can comply with them.
What is the EUDR?
The EUDR aims to ban the import into the EU of products that contribute to deforestation, whether legal or illegal. The regulation aims to transform business practices by encouraging companies to adopt more sustainable approaches.
These regulations apply to a variety of products, including palm oil, cattle, soy, coffee, cocoa, wood and rubber, as well as products derived from these raw materials (such as beef, furniture and chocolate).
See the complete list of products in Annex I of the regulation.
By targeting raw materials with a high environmental impact, the EUDR is a global initiative aimed at reducing deforestation worldwide. It encourages responsible sourcing while ensuring compliance with legal standards on the international market.
What "zero deforestation" means in the EUDR regulation
Under the EUDR, zero deforestation means that the products concerned must not come from deforested land after December 31, 2020.
Deforestation is defined as the conversion of forests to agricultural use, which is prohibited for products complying with the regulation. However, forest conversion for non-agricultural purposes is not covered.
For wood products, forests must be managed sustainably, avoiding any degradation. Forest degradation is defined as a structural change in forest cover, including the conversion of virgin or natural forests to plantations or other forest land.
Key dates :
- From December 30, 2024, large and medium-sized companies will have to comply with EUDR requirements.
- Small and micro-businesses, if established before December 30, 2020, have until June 30, 2025 to comply.
Which companies are affected by the EUDR?
Operators: Any company that places a commodity or relevant product on the market or exports it is considered an operator within the meaning of the EUDR.
Traders: Any company that makes a product available on the market as part of a commercial activity without being an operator is considered a trader.
The due diligence system and its obligations
Companies must submit due diligence declarations to an electronic deforestation register set up by the European Commission.
These declarations will be examined by the register and the competent authorities of the Member States, and the regulation imposes several essential stages:
1. Information gathering
Operators must gather data and documents to prove that their products are "zero deforestation" and compliant with legislation.
This information must be kept for five years:
- Product description (commercial and scientific name).
- Quantity.
- Country of production.
- Precise geolocation of the plots where the raw materials were grown.
- Production date or period.
- Names of suppliers and buyers.
- Verifiable proof that the product is deforestation-free and complies with current legislation.
2. Risk assessment
This stage involves analyzing data to assess whether a product is at risk of not complying with EUDR rules.
Operators must demonstrate how they have verified the information collected against the risk assessment criteria and how they have determined the level of risk for the products concerned by the EUDR.
The European Commission will develop a central database on deforestation risks and publish a regularly updated list of low- and high-risk countries by December 30, 2024.
3. Risk mitigation
This stage involves the adoption of proportionate measures to reduce the risk of product non-compliance. Even if the risk is deemed negligible, the operator must still adopt measures such as :
- Request additional information or documents.
- Take other measures detailed in Article 9.
Operators must also implement policies and procedures to better manage risk:
- Risk management models (reporting, record-keeping, internal control, appointment of a compliance officer for large companies).
- Independent audit function to verify internal policies (for large companies).
What are the controls and penalties?
The European Commission will classify countries by risk level by the end of 2024.
- Products from low-risk countries: simplified procedures.
- Products from high-risk countries: strict controls, with penalties for infringements and risks of delay.
Operators will have to provide the geographical coordinates of the supply regions to facilitate checks.
In addition, checks can be carried out using satellites and DNA analysis, so that customs authorities can verify the conformity of goods entering or leaving the EU.
Non-compliance can result in penalties of up to 4% of annual sales.
The keys to effectively meeting EUDR requirements
Faced with the new requirements imposed by the EUDR, companies need to adopt robust strategies to ensure compliance.
This means implementing specific tools and practices to manage data, ensure traceability, and respond effectively to the expectations of the authorities.
The main approaches :
Data management and reporting
EUDR compliance requires rigorous collection of Due Diligence Declarations (DDS) from suppliers and stakeholders.
As a result, companies need to centralize this data in a standardized way and share it with the relevant authorities.
Digital solutions can simplify this task by automating interactions with partners, such as customs brokers, while guaranteeing direct connectivity to the EUDR portal for transmission of the required information.
Advanced traceability solutions
Companies need to establish a clear link between raw materials and finished products to ensure that each stage of the process meets "zero deforestation" requirements.
Integrated systems, connected to ERP or production software, enable product movements to be tracked throughout the production chain, ensuring DDS continuity and facilitating compliance.
Precise data management
Centralized management platforms streamline the collection, analysis and reporting of procurement-related data.
Thanks to intuitive dashboards, companies can monitor their compliance indicators in real time and generate detailed reports for the relevant authorities, reducing the risk of errors or delays.
Support and expertise
EUDR compliance can be complex, but expert guidance can help companies navigate these new obligations.
Specialized consulting services offer strategic advice, help interpret regulations, and support the implementation of compliance processes.
By working with experts, companies can develop tailor-made strategies to meet EUDR requirements while optimizing their operations.
MyTower Trade Compliance - your complete solution for EUDR compliance
Our MyTower Trade Compliance solution simplifies EUDR compliance management, while reducing the associated risks and costs.
Key features :
Collaboration between players: gathering information from suppliers or internal teams, transmitting instructions to customs representatives, and making data available to customers.
Traceability of EUDR flows: tracking products from import to release for consumption, resale or export, by interpreting movements in the ERP system.
Automated exchanges: automated DDS management, with direct connection to European systems to simplify processes.
Archiving and audit trail: secure storage of all documents, with simplified access in the event of a control or audit.
Who can benefit from our solution?
Our EUDR solution is designed for a wide range of players:
- Importers of agricultural raw materials, such as palm oil, soybeans, coffee, cocoa, rubber, timber and livestock.
- Manufacturers and distributors of wood-based products such as furniture and paper.
- Any company marketing products at risk of deforestation in the European Union.
Don't let EUDR compliance become an obstacle. Adopt our innovative solution to effectively manage traceability, reduce risk, and demonstrate your commitment to forest protection.
