The European Union has taken a significant step to combat global deforestation with Regulation (EU) 2023/1115, commonly known as the EU Deforestation Regulation (EUDR). This regulation aims to ensure that products placed on the EU market do not contribute to deforestation or forest degradation.
Implementation Timeline of the EUDR
Initially, the EUDR was scheduled to take effect on December 30, 2024, for medium and large enterprises. However, the start date has been postponed by one year. The obligations will now apply to large market operators and traders from December 30, 2025, while micro and small enterprises have until June 30, 2026, to comply with the requirements.
Key Requirements of the EUDR
The EUDR mandates that companies ensure specific raw materials and products derived from them, marketed within or exported from the EU, are not linked to deforestation or forest degradation. The regulated raw materials include:
Companies must provide evidence that these products do not originate from land that was deforested after December 31, 2020. Additionally, compliance with the relevant national laws of the country of origin is required. A central aspect of the regulation is due diligence: companies must gather detailed information about their supply chain, including the geographical coordinates of cultivation areas, to ensure traceability.
Implementing the EUDR in Businesses
Implementing the EUDR poses significant challenges for businesses. Studies indicate that 80% of companies are behind schedule despite the extended timeline.
To successfully meet the EUDR requirements, companies should follow these steps:
1. Supply Chain Analysis: Conduct a comprehensive analysis of supply chains to identify potential risks related to deforestation.
2. Supplier Selection: Collaborate with suppliers that can demonstrate sustainable practices and compliance with the EUDR requirements.
3. Data Management: Implement systems to collect and manage the required data, including the geographical origin of raw materials.
4. Training and Awareness: Train employees and suppliers on the EUDR requirements and the importance of deforestation-free supply chains.
5. Continuous Monitoring: Establish processes for regular review and updates of supply chain information to ensure compliance.
Early and proactive engagement with the EUDR requirements is crucial to minimize legal risks and maintain competitiveness in the EU market. Companies should use the remaining time before the regulation’s implementation to make necessary adjustments and embed sustainable practices in their supply chains.