The EU Regulation on Deforestation-Free Products (EUDR) will enter into obligation on 30 December 2024 for medium and large-sized companies. Time starts ticking to be ready for compliance. Here is what you need to know now.
What makes this law different?
This legislation sets mandatory due diligence standards to level the playing field. It is additional to the current adherence to existing laws of the producing country. The reversed burden of proof makes this law also unique.
Reversed burden of proof
The burden of proof is reversed, meaning that the burden of proof is for the defendant. It is essential to have accurate data to prove that no deforestation has occurred after the cut-off date before shipments are made.
Commodities covered
Cocoa, Coffee, Palm oil, Rubber, Soy, Wood, Cattle, Charcoal and Printed paper products, and their derivatives or embedded products.
Cut-off date for deforestation
31 December 2020
Penalties
Penalties for non-compliance could include fines of up to 4% of company turnover within the EU, temporary exclusion from public procurement/access to public funding, and confiscation of goods.
Regulation enforcement timeline
The regulation entered into force for medium and large-sized companies on 29 June 2023 and will enter into obligation 18 months after this date, on 30 December 2024.
Any commodity produced and crossing the EU border after the legislation has entered into force will be subject to the regulation (import and export). The moratorium for “activation” is 18 months, which, e.g. in cocoa, means that any cocoa harvested for the 2024 main crop will be subject to the regulation.
For SMEs, the regulation will enter into obligation 24 months after it entered into force, which means 30 June 2025.
Three-step process for compliance
A three-step process is outlined for operators/traders to follow and submit relevant due diligence documentation:
Information requirements/data collection
Risk assessment
Risk mitigation.
Through completing this process, it should be demonstrated that the products do not come from land that was deforested after 31 December 2020.
Risk levels
Following the benchmarking system, what steps to take depends on the sourcing country's risk level and the outcomes of the steps taken.
Step 1, trusted data, is mandatory; this is the foundation for further steps. It is also the most challenging step to take.
There are risk levels per country: low, standard, and high. If a country is deemed low-risk, you do not have to carry out the risk assessment (Article 10), step 2.
If step 2, the risk assessment, is completed without finding any apparent risks, there is no need for step 3, risk mitigation, as there are no risks to mitigate.
When the legislation enters into obligation, all risk levels will be set to standard (Article 27, paragraph 1a), assigning risk levels to each country over time.
The risk level determines the mandatory auditing coverage for the competent authority of the country where the goods are entering the EU. Annual checks will have to include a minimum of the amounts as seen in the table.
Steps to take
Step 1
Information requirements/data collection
Article 9: operators have to collect information, documents and data demonstrating that the relevant products are compliant:
(a) Description, including the trade name and type of the relevant products as well as, in the case of relevant products that contain or have been made using wood, the common name of the species and their full scientific name; the product description shall include the list of relevant commodities or products contained therein or used to make those products;
(b) Quantity (expressed in net mass or, when applicable, volume, or number of units) of the relevant products;
(c) Identification of the country of production and, where relevant, parts thereof;
(d) Geolocation of all plots of land where the relevant commodities that the relevant product contains, or has been made using, were produced, as well as date or time range of production. Where a relevant product contains or has been made with relevant commodities produced in different plots of land, the geolocation of all different plots of land shall be included. Any deforestation or forest degradation in the given plots of land shall automatically disqualify all products and commodities from those plots of land from being placed and made available on the market or exported therefrom. For relevant products that contain or have been made using cattle, and for such relevant products that have been fed with relevant products, the geolocation shall refer to all the establishments where the cattle were kept; for all other products of Annex 1, the geolocation shall refer to the plots of land.
(e) Name, email and address of any business or person from whom they have been supplied with the relevant products;
(f) Name, email and address of any business or person to whom the relevant products have been supplied;
(g) Adequately conclusive and verifiable information that the relevant products are deforestation-free;
(h) Adequately conclusive and verifiable information that the production of relevant commodities has been conducted in accordance with the relevant legislation of the country of production, including any arrangement conferring the right to use the respective area for the purposes of the production of the relevant commodity.
Step 2
Risk assessment (not applicable to low-risk countries)
Article 10: Operators shall verify and analyse information collected in accordance with Article 9.
This risk assessment extends to include variables that can influence the product/commodity being non-compliant: country risk level, presence of forests close to producing area, presence of indigenous peoples close to producing area, the prevalence of deforestation within that country/region/area, corruption, data falsification, lack of law enforcement, violations of international human rights, complexity of the supply chain and stage of processing, and the risk of circumvention.
Step 3
Risk mitigation (skip if Article 10 has shown no or negligible risk)
Article 10a: If, through the risk assessment, there are more than negligible risks associated with the commodity, operators may be required to provide additional information, data or documents, undertaking independent surveys or audits or other measures pertaining to information requirements set out in Article 9. This may also include supporting the compliance with this regulation of their suppliers, in particular smallholders, through capacity building and investments.
What Meridia can do for you
Accurate and high-quality data is the critical component for compliance
The new EU regulation aims to tackle deforestation based on submissions and having the correct due diligence frameworks in place.
Accurate and high-quality data is, therefore, the critical component for compliance. Having your data verified before submission is essential to ensure your understanding of the risks in your supply chains.
For step 1, information requirements and data collection, Meridia can support you with the following:
Farm mapping and field data collection - Meridia Survey
Accurate data is key, yet the hardest to achieve. With Meridia Survey, we offer an integrated platform tailored to large-scale mapping, data collection and processing.
Data quality verification - Meridia Verify
With Meridia Verify, we verify your geolocation data and provide risk assessments on different variables.