Explained: The EU Regulation on Deforestation-free Products (EUDR)

by: Clara vom Scheidt, YSA Graduate

The discomfort around the power of the EU and the question(s) of how companies should engage with it, is on top of the political agenda at the moment. The EU Regulation on Deforestation-free supply chains is one example that shows how decisive EU decisions are on the global trade market. Ready for a deep dive? No, worries, I will take you along in simple steps.

In this article, we begin with an overview: What is the regulation generally about?

The intention of the EU with this regulation is to protect forests, especially rainforests with their irreplaceable biodiversity and their service as huge carbon sinks. A few commodities, unfortunately, come with immense destruction: Some examples are the production of delicious things like coffee and cacao, as well as timber and soy (predominantly used for our animal feed).

With a growing world population and increasing demand for such products, the destruction of forests is hard to halt if these trade dynamics go unchecked. Which, as we all know, threatens the living conditions of our children/grandchildren…

So…

The EU regulation gives companies the chance (and obligation) to filter their supply chains and ask: Does my product cause deforestation? How can I change my production in a way that does not harm forests?

• The Commodities included are: Cattle, cocoa, coffee, palm oil, rubber, soya and wood.
• Every single company selling these commodities or listed products made of them on the EU market (in stores or online) must: Prove that their products are not linked to deforestation. To ''prove'' this, basically means that companies have to conduct due diligence statements in order to demonstrate their products only carry a “negligible risk” or no risk of non-compliance.
• … meaning that the commodities they use, have not been grown on land that was deforested after Dec 31^st, 2020.

WHO? 

An “operator” is defined as “any natural or legal person who, in the course of a commercial activity, places relevant products on the EU market or exports them” (Art. 2, 15) and a “trader” as any person in the supply chain (other than the operator) who makes relevant products available on the market in the course of a commercial activity. So basically, any company that sells products within the market that contain these 7 commodities and simultaneously are listed in Annex I regarding product type.

WHICH PRODUCTS?

To determine if a specific product is subject to the regulation, refer to Annex I of the legal text. The regulation applies to:

• Commodities: Cattle, cocoa, coffee, oil palm, rubber, soya, and wood.
• Products: Certain goods made from these commodities—not just raw materials.
• Important: A product must be listed in Annex I and contain or be made from a covered commodity to fall under the regulation. Check Annex I if your commodity or product is listed: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R1115.
•  Example 1: A chocolate bar (made from cocoa) is covered, as both cocoa (commodity) and chocolate (product) are listed in Annex I.
• Example 2: A wooden chair is covered because both wood and furniture are included.
• Example 3: Soap made with palm oil is not covered because while palm oil is listed as a commodity, "soap” is not included in Annex I as a product.

WHAT IS DEFORESTATION?

In this context, ‘’forest’’ is defined as forest land of at least 0,5 hectare. Deforestation means the conversation of forest to agricultural land; also, forest degradation has to be excluded, meaning the conversation of primary forest into plantation forest and the conversion of naturally regenerating forests into other wooden land (with specific definitions of these terms in the law, Art. 2 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R1115 ). 

HOW TO DO IT?

Businesses must assess risk, document their compliance, and face penalties if they fail to do so. This means that the responsibility for proof is in your hands.

• Operators are obliged to conduct due diligence before their product is placed on the market or exported from it to prove that their product is deforestation-free and that its production has been in accordance with the laws of the countries of production.
• Only if there is no risk or a “negligible risk” that the product is non-compliant, it can be sold on the Union market.
• The information system for the Due Diligence process can be found here: https://eudr.webcloud.ec.europa.eu/tracesnt/login.
• Be aware that anything submitted has legal value and can be used for checks by authorities. To get familiar with the structure the EU made a system available for learning purposes only. You can access it here: https://acceptance.eudr.webcloud.ec.europa.eu/tracesnt/ .

After heated debate, the EU agreed on a delay of 12 months to give companies a tiny bit more time: The law now becomes applicable for large and medium-sized businesses end of December 2025 and for micro and small businesses end of July 2026.

Still: The investigations can require information gathering all the way down to the single patch of land, so don’t waste any time. Meaning: Roll up your sleeves, don’t hesitate, and stay tuned to understand the EUDR bit by bit.