An Overview on EU Deforestation-Free Regulation

The European Union Deforestation Regulation (EUDR) is a transformative piece of legislation aimed at promoting sustainable supply chains and combating global deforestation. As part of the EU’s broader environmental, social, and governance (ESG) goals, the EUDR introduces stringent compliance requirements for businesses, including due diligence, risk assessments, and annual reporting. Failure to comply can result in severe consequences, such as product removal from the market, brand damage, and loss of future contracts.

What Is the Goal of the EUDR?

The primary objective of the EUDR is to mitigate global deforestation risks by enforcing responsible sourcing practices. By leveraging access to the EU market, the regulation aims to ensure that products entering the region are:

1. Deforestation-Free: Products must not result from the conversion of forests to agricultural use, whether human-induced or otherwise.
2. Legally Produced: Products must comply with the relevant legislation of the country of production.
3. Covered by Due Diligence Statements: Businesses must provide documentation proving compliance with EUDR requirements.

To achieve these goals, manufacturers must establish processes for collecting sustainability risk data from their supply chains and conduct annual risk assessments. If a deforestation risk is identified, manufacturers must notify the competent authorities of any EU member states where non-compliant products have been placed on the market.

EUDR Fundamentals: Scope & Timelines

The EUDR applies to a wide range of commodities and derived products, including:

• Commodities: Cattle, Cocoa, Coffee, Oil palm, Rubber, Soya, Wood
• Derived Products: Meat products, Leather, Chocolate, Palm oil derivatives, Glycerol, Natural rubber products, Pulp and paper goods (e.g., printed books)
• Exemptions: Goods made solely from recycled materials destined for landfill are excluded from the regulation.

EUDR Timelines:

• The EUDR applies to products manufactured on or after June 29, 2023.
• The existing Regulation (EU) No 995/2010 for timber and timber products will remain in effect until December 31, 2027. After this date, timber products must comply with the new EUDR requirements.

How to conduct EUDR Risk Assessments

The EUDR places a strong emphasis on supply chain risk assessments, particularly focusing on:

1. Forests and Indigenous Peoples: Ensuring that sourcing practices do not harm forests or violate the rights of indigenous communities.
2. Country of Origin Risks: Assessing deforestation rates, corruption, human rights violations, and other ethical issues in the production country.
3. Supply Chain Complexity: Tracing materials back to their origin, including the specific plot of land where commodities were produced. Risk assessments are not a one-time task but an ongoing process requiring annual reviews to address changes and improve compliance. Manufacturers must maintain detailed documentation and make it available to competent authorities upon request.

EUDR A New Era of Responsible Sourcing

The EUDR is part of a broader shift toward responsible sourcing in global supply chains. Similar to the evolution from conflict mineral reporting to responsible mineral sourcing, the EUDR represents a new generation of regulations that demand deeper transparency and accountability.

Key takeaways for businesses include:

• Proactive Due Diligence: Go beyond basic data collection to quantify impacts and externalities in your supply chain.
• Supplier Engagement: Educate suppliers about new data requirements and make them partners in compliance.
• Continuous Improvement: Regularly update your due diligence processes to stay ahead of regulatory changes.

How to Improve Your Due Diligence System for EUDR

To comply with the EUDR, manufacturers must implement a robust due diligence program. Investing in a supply chain sustainability management platform like Acquis Compliance Tool can streamline this process by enabling you to:

1. Streamline Supplier Engagement: Use a single portal for interactions with suppliers.
2. Automate Data Collection: Leverage survey templates and validation rules to gather accurate information.
3. Collect ESG Data: Support responsible sourcing due diligence with comprehensive supplier data.

Acquis provides the tools needed to identify risks, ensure compliance, and maintain transparency in your supply chain.

How to Prepare for EUDR Compliance

1. Conduct a Supply Chain Assessment: Identify high-risk areas and prioritize due diligence efforts.
2. Engage Suppliers Early: Collaborate with suppliers to ensure they understand and meet EUDR requirements.
3. Invest in Technology: Use digital tools to collect, standardize, and analyze supplier data.
4. Stay Informed: Monitor regulatory updates and industry best practices to stay ahead of changes.

Conclusion

The EUDR marks a significant step forward in the EU’s efforts to combat deforestation and promote sustainable supply chains. While the regulation presents challenges, it also offers an opportunity for businesses to lead in sustainability and environmental responsibility. By proactively embracing EUDR compliance, companies can protect their market access, enhance their brand reputation, and contribute to a greener future.

For expert guidance on navigating the EUDR and ensuring compliance contact us today. Together, we can build a sustainable and deforestation-free supply chain.