Published: May 2024
Did you know that almost 90% of deforestation is directly linked to the way products—ranging from coffee, cacao, and chocolate to timber, furniture, and paper—are sourced in global supply chains? Despite attempts to stop selling products tied to deforestation, the truth is, these efforts haven't slowed down the alarming rate at which our forests are disappearing.
Why? One of the biggest reasons is the lack of transparency and traceability in supply chains.
Being the second-largest importer of agricultural goods linked to tropical deforestation (right after China), the EU has decided to address the issue. In 2023, the EU adopted the EU Deforestation Regulation (EUDR), obligating companies to trace their supply chains and ensure that the products they sell don’t contribute to deforestation.
In this blog, we'll dive into the key details of the regulation and explore how companies can prepare to comply.
What is the EU Deforestation Regulation (EUDR)?
The EU Deforestation Regulation (EUDR) mandates companies to conduct due diligence to guarantee that their products, such as soy, beef, palm oil, wood, cocoa, coffee, and rubber, are sources without causing deforestation or forest degradation.
The EUDR is a part of the European Green Deal that entered into force June 29, 2023, and is expected to come into full effect on December 30, 2025, if the 12-month delay proposed on October 2, 2024, gets approved. It's expected to drive major changes in global sourcing and production practices, significantly reducing the EU's impact on deforestation and forest degradation worldwide.
Who does the EUDR apply to?
The EU Deforestation Regulation (EUDR) applies to all companies that place, make available on the EU market, or export products from the EU market containing, being fed with, or made using the following commodities:- Cattle (including beef and leather)
- Cocoa
- Coffee
- Oil palm (including palm oil)
- Rubber
- Soy
- Wood (including printed paper, books, furniture, and boards)
- Some derived products such as chocolate and selected palm oil-based derivates
What are the requirements in the EUDR?
To stay aligned with the EU Regulation on Deforestation-free products (EUDR) and ensure full compliance, companies must follow the EUDR requirements:- Deforestation-free due diligence check
Companies must conduct due diligence to prove the products they place or export on the EU market are free from deforestation. This requires tracing products back to the specific plot of land where the commodities were produced and investigating to ensure:
- Data collection on important information of the product, including its origin, and supplier details;
- Risk assessment measures to identify any non-compliance risks; and
- Implementation of adequate risk mitigation procedures.
- Compliance with local legislation
Companies must also verify that the commodities and products comply with the relevant legislation in the country of production, including land use rights, environmental protection, labor rights, human rights, and the rights of indigenous peoples.
- Due diligence statement
Operators must submit an electronic due diligence statement to the European Commission and the competent authorities designated by each EU member state, declaring that they have exercised due diligence and found no or only negligible risk of non-compliance.
The EUDR timeline: key dates to know
(Timeline if the 12-month delay proposal gets approved)
2019 - The European Commission adopts a policy framework and prioritizes to shape the development of the EUDR
2021 - The European Commission adopts a proposal for a regulation on deforestation-free products
2022 - The European Union agrees on the regulation on deforestation-free products
2023 - The EUDR enters into force on June 29th
2025 - The EUDR obligates medium and large-sized companies to become compliant by December 30th (18 months after the EUDR enters into force)
2026 - The EUDR obligates small and micro-sized enterprises by June 30th
2029 - Every five years thereafter, the Commission carries out a general review of the EUDR, starting on June 30th
How can businesses prepare for the EUDR?
To prepare and stay ahead of the EU Regulation on Deforestation-free products (EUDR), businesses can follow several key steps:- Map your supply chains: Gain full visibility into your supply chain, tracing products back to the source. Identify any gaps in traceability or areas of high risk.
- Prioritize risk assessment: Establish robust due diligence systems to collect, verify, and report on the origin and production methods of their commodities and products.
- Implement risk mitigation: Based on your risk assessment, work directly with suppliers to improve practices and compliance. Engage with suppliers and partners to ensure they are also aware of the EUDR requirements and are taking the necessary steps to comply.
- Monitor progress continuously: Compliance is an ongoing process. Make sure to stay informed about the latest developments and guidance related to the EUDR, as the regulation and its implementation may evolve.
Track your products to the source with Worldfavor
Gain visibility on each tier of your supply chain to prepare for the EUDR with Worldfavor. Trace your product's journey all the way back to the source sourcing by work together with your suppliers. Uncovering hidden risks and improving the sustainability of your supply chain have never been easier!
Talk to a Worldfavor expert today to learn how our platform can future-proof your business against evolving sustainability regulations.
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