EUDR – EU's No Deforestation Regulation

check 14/11/2023

What are the new anti-deforestation regulations and what do they mean for businesses?

1. What is the proposed EU No Deforestation Regulation and why is it important?

The EU's Zero Deforestation Regulation (EUDR) is a new EU initiative aimed at curbing deforestation caused by forestry and agricultural activities worldwide. The new regulation will introduce new mandatory due diligence requirements for EU businesses by 2024, expanding massively in scope and ultimately replacing the previous regulation. EU timber regulations (EUTR).

Europe is one of the largest importers of deforestation-related commodities, including 50% of the world's coffee and 60% of the world's total cocoa. These commodities alone account for more than 25% amount of tree cover lost globally from 2001-2015 .Given its crucial role in the market, deforestation regulations aim to reduce the impact of products purchased by EU citizens on forests and forest cover worldwide. Importantly, the roadmap toward net zero, and with the EU hoping to lead the way, similar management requirements could be applied in other markets, including the UK.

2. Who is affected by EUDR?

Like EU Timber Regulation In 2010, the EU defined those subject to the EU's Zero Deforestation Regulation (EUDR) as '‘ operator ‘' and '‘ merchant ‘'Operators (companies introducing products to a common market for the first time) will have to conduct their supply chain due diligence to ensure there is no deforestation or forest degradation, while traders will be responsible for storing and sharing information about their supply chains with operators.'. Importantly, the EUDR also defines large business operators as those who wield significant influence due to the scale of their impact. .

Which products does it apply to?

The proposed no-deforestation regulations target those items and some products derived from them, such as chocolate, leather, and furniture, which have the greatest impact on deforestation.

3. What should you do?

Under the proposed EU regulations, operating companies are obligated to conduct due diligence to ensure that only non-deforested products are allowed into the EU market. Companies must demonstrate that goods were not produced on any land that was deforested or degraded after December 31, 2020. The goods must also be produced legally.

An evaluation system consists of three parts.

Gathering information– Collect data on your product's supply chain, including geographic location and initial production timeline.
Risk assessment– Evaluate the information gathered to identify risks of deforestation, forest degradation, and illegality associated with the product.
Minimize risks– Actions aimed at reducing negligible risks to negligible levels. These actions may include requesting additional information, conducting independent investigations, testing, or auditing scientific products.

The comparison system operated by the Commission will identify countries with low, standard, or high risk in producing goods or products that are not subject to deforestation or comply with the laws of the producing country.

The responsibilities of operators and competent authorities will vary depending on the risk level of the country or region of production, with simplified assessment obligations for low-risk products and increased monitoring for high-risk areas.

When will it be implemented?

The first proposal for the EU's Deforestation-Free Rule was adopted by the EU Commission in 2022 and subsequently approved by the EU Parliament with proposed amendments. The next stage will be for the Parliament to negotiate its position with the Council and the European Commission. Following their agreement, the rule will become binding law in EU member states. It is possible the rule will come into effect in 2024.

What's new? Is it similar to the EU Timber Regulation? (EUTR) Are not?

The key difference between the previous timber regulations and the EUDR is the requirement to prove the product's origin.‘not deforested’ And it's not just about legal origin. This means, for example, a raw material may have been legally harvested in the country of origin under local law but could still be considered to pose a high risk of deforestation.

	EU timber regulations	EU regulations against deforestation.
Product range	Wood and wood products only.	Wood and wood products, beef, cocoa, coffee, palm oil, soybeans. It could be natural rubber, corn, or leather.
Import conditions	The product has been shown to have negligible risks through the evaluation process.	The product has been assessed as having negligible risk following the assessment process. The assessment statement must be provided to the competent authority via the EU-operated online information system before the product is placed on the market.
Important information for the assessment	Evidence of legal harvesting is based on a risk analysis of the timber species used, along with the relevant country of origin (through a traceable supply chain).	Evidence that products are not subject to deforestation or forest degradation is based on information gathered about their origin and supply chain trajectory.
Assessment obligations	The operator (the person who first introduces the product to the EU market)	Large-scale operators and traders (traders with more than 250 employees)
National benchmarking system	No. The Directive on Documentation (DDS) will apply regardless of country of origin.	Low risk: Simple DDS (information gathering only) Standard risk: all DDS steps, inspected by the competent authority 5%. High risk: all DDS steps are subject to inspection by the authorities 15%.
CITES species	Products may be imported if they are made from CITES-certified species.	CITES species will continue to be assessed for their potential to cause deforestation.
FLEGT	If a product has a FLEGT license, it is considered legal timber and can be imported.	FLEGT timber is considered legal, but operators still have to prove the product is not produced through deforestation.