Published: October 2024
As the EU Deforestation Regulation (EUDR) deadline approaches many are asking: Will it be delayed? With concerns raised by major exporters like Brazil and Indonesia, and the complexity of compliance requirements, businesses are uncertain about what comes next. A delay could offer companies more time to adjust, but it may also hinder progress in curbing global deforestation. So, what’s the latest?
Psst.. for a detailed breakdown of the EUDR, visit our blog: The EU Deforestation Regulation (EUDR): what you need to know
Why is the EUDR important?
Deforestation is a leading cause of climate change and biodiversity loss, and the EU contributes to this by consuming products linked to deforestation. The EUDR aims to make sure that the EU:
- Minimizes its global contribution to deforestation and forest degradation, helping to curb worldwide deforestation.
- Reduces its role in greenhouse gas emissions and supports efforts to protect global biodiversity.
For more information, check out our blog: The EU Deforestation Regulation (EUDR): what you need to know
Will EUDR be delayed?
Lately, there have been rumors and calls for the EU to delay the implementation of the EUDR based on concerns that the regulation is too complex and that EU:s supporting tools such as the country benchmarking database and its depository for due diligence statements are delayed. Operators and traders have raised concerns that the regulation may lead to unfair competition for small-scale farmers and certain countries.
Despite objections from major agricultural exporters like Brazil, India, Indonesia, and the US, the European Union reportedly stated it will not postpone the EUDR's implementation, which is set for December 30. This was announced during the World Trade Organization's (WTO) agriculture committee meeting on September 25 and 26.
In a press release on October 2, EU Commission announced that it has requested a 12-month delay. And explains that this extended timeline will allow for the development of additional guidance documents and more time for preparation by global partners and both EU-member states and third countries.
If approved by the European Parliament and the Council, the law would take effect on December 30, 2025, for large companies and June 30, 2026, for micro and small enterprises. With all the implementation tools technically ready, the additional 12 months can serve as a valuable phasing-in period to make sure a smooth and effective rollout.
The Commission is now actively encouraging the European Parliament and the Council to approve the proposal for an extended implementation period by the end of the year.
Key compliance deadlines (entered into force June 29, 2023)
- Large companies: Must comply by December 2024
- Small companies: Have until June 2025
Key compliance deadlines (new proposal announced Oct 2, 2024)
- Large companies: Must comply by December 2025
- Small companies: Have until June 2026
EUDR compliance requirements: Key obligations for operators and traders
Operators and traders need to trace the geolocation of commodities, assess risks, and verify compliance with national laws. This includes products like beef, soybeans, palm oil, coffee, and wood.
Below is a table detailing obligations based on company size and type.
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Will the EU Due Diligence database be ready in time?
In the press release shared on October 2nd, 2024, EU commission included an update of the tools for implementing the EUDR, the deforestation benchmarking database and the Due Diligence Registry.
The Commission is engaging in dialogues with key stakeholders in affected countries to spearhead the finalization of the country benchmarking system, with a proposed Implementing Act set for June 30, 2025.
Additionally, the Information System designed for businesses to register their due diligence statements will begin accepting registrations in early November 2024, with full functionality expected by December 2024. This allows operators and traders to register and submit their due diligence statements ahead of the law's enforcement, making sure they are well-prepared for compliance.
What are the consequences of non-compliance with EUDR?
Non-compliance with the EU Deforestation Regulation (EUDR) can result in serious penalties for operators and traders, including both financial and operational sanctions. Here’s what could happen if a company fails to meet the regulation’s requirements:
- Fines: Companies may face fines amounting to at least 4% of their total annual EU-wide turnover.
- Confiscation of products: The relevant products that do not comply with the EUDR can be confiscated by authorities.
- Confiscation of revenues: Any revenues earned from transactions involving non-compliant products may also be seized.
- Exclusion from public contracts: Companies could be temporarily excluded (up to 12 months) from public procurement processes, including access to public funding, grants, and tenders.
- Market restrictions: A temporary prohibition may be placed on a company, preventing it from placing or exporting the relevant commodities or products on the market.
- Restriction on simplified due diligence: Companies that commit serious or repeated violations may lose the ability to use simplified due diligence procedures, as outlined in Article 13 of the EUDR (Source: Article 25 of the EUDR.)
Non-compliance can seriously impact both the financial and operational standing of a company, making it essential to follow the regulation closely.
How to implement EUDR – the common denominator
The EUDR may seem complex with its many new requirements for companies, but it’s important to remember its core purpose: to reduce global deforestation by targeting high-risk commodities that contribute significantly to this issue. This regulation also aims to lower EU trade-related greenhouse gas emissions and promote long-term sustainable production, benefiting both people and the planet.
In practical terms, one common denominator applies to all companies:
Know your supply chain. Understand which suppliers are concerned and where the commodities were grown and produced!
While the commodities under the EUDR differ in features and supply chain complexity, this foundational step is essential for compliance and sustainability.
Worldfavor's digital tool can help you identify and track your EUDR commodities and derived products. Talk to a Worldfavor expert today to learn how!
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