EU Deforestation Regulation Consulting
Our supply chain experts help companies conduct the due diligence needed to meet the EU Deforestation Regulation (EUDR)
What is EUDR?
The European Union Deforestation Regulation (EUDR) is aimed at guaranteeing that the select products sold or produced within the EU do not contribute to deforestation or forest degradation worldwide. The EUDR entered into force on June 29, 2023, and provides affected entities 18 months to fully implement the law. As such, December 30, 2024 is the date upon which most affected entities must demonstrate “deforestation-free” compliant products,
The EUDR currently focuses on the import and export of seven key commodities to/from the European Union that are considered to have the largest impacts on global deforestation – cattle, soy, palm oil, wood / timber, coffee, cocoa, and rubber – and certain products derived from these commodities. The law obliges operators and traders that import and / or sell these products on the EU market (or exports them out of the EU market) to exercise mandatory due diligence and evaluate deforestation and other legal risk within their supply chains. Affected companies will be required to submit due diligence statements to a centralized EU information system (registry) that ensures products are “deforestation-free and legally produced.” To claim the products are deforestation-free, the products themselves or their in-scope inputs must not have been produced on land that was deforested or degraded after December 31st, 2020.
Exceptions include small and medium sized enterprises (SME) who have until June 30, 2025 and timber products subject to EU Timber Regulation prior to June 29, 2023 have until December 31, 2028.
What companies need to do to be compliant with EUDR
The EUDR will require companies to build out a robust due diligence system that covers all of the seven commodities and their derived products sourced globally. For companies with existing due diligence systems, integrating the EUDR requirements will require a significant overhaul due to the level of detail required by the law.
Due diligence shall be conducted by operators and non-SME traders which includes:
- Understand scope & value chains of all products and suppliers of products that contain the relevant commodities or their derivatives.
- Establish detailed traceability for in-scope commodities and their derivatives back through the supply chain and obtain key supplier information along with detailed GPS coordinates of all plots of land where the commodities were produced.
- Assess risk based on risk criteria which includes information about the supply chain, the sourcing region, deforestation and degradation pressures, and legal compliance to local social and environmental laws amongst others to determine the need for risk mitigation actions. Use of satellite imagery analysis, supplier audits, product certifications and other verification tools shall be considered as part of the risk assessment and mitigation steps..
- Take mitigation actions for at-risk products or sourcing regions to ensure any product placed on the market has a negligible risk of contributing to deforestation. These actions include demonstrating removal of non-conformant products prior to import into the EU market.
- Submit due diligence statement and required product and GPS data to registry prior to EU trade of products containing in-scope commodities.
Oversight, penalties and fees
Competent authorities in each EU member state will be charged with monitoring operators and traders’ compliance with EUDR. Spot checks and reviews of due diligence systems based on risk will be conducted. Products found to have a high risk of non-compliance – or lacking sufficient detail – may be held in customs while due diligence checks are completed. Competent authorities may seize product and charge fees to recoup costs of monitoring activities that detect non-compliant products.
Companies with specific questions about how the law will be applicable to their operations are encouraged to contact SCS Consulting today.
How SCS Consulting Helps Companies Achieve EUDR Compliance
Achieving EUDR compliance will look different for every company based on each company’s sourcing and trading of in-scope commodities going into or out of the EU market. As such, SCS’ deep expertise in the supply chains of each of the seven commodities will help companies to make sense of the law within the context of their business operations. SCS Consulting provides numerous services that can be utilized by companies depending on needs and where they are in their compliance journey.
Steps to Achieving EUDR Readiness and Compliance
- Due Diligence Systems: SCS can support the development of a due diligence system from the ground up, or support refining an existing system to be fit for purpose for meeting EUDR compliance. System development and refinement is the first step for integrating EUDR requirements into your business.
- Compliance Gap Assessment: SCS supports carrying out compliance gap assessments that drill down into your due diligence system and uncover the gaps within your current sourcing efforts, whether it’s a well-established program or otherwise. SCS can identify gaps and determine systems that will need to be developed for tracing products and obtaining geographic information.
- Risk Assessment and Mitigation Support: SCS’risk assessment services help you to understand the relative likelihood and severity of EUDR non-compliance and serve to identify the prioritized steps that need to be taken towards additional information-gathering such as through targeted supplier engagement and audits as well as possible mitigation measures.
- Compliance Support: SCS works with companies to develop supplier codes of conduct, policies, due diligence procedures, risk assessments, traceability system refinement, and supplier training and engagement in support of EUDR compliance.
- Risk Mitigation: SCS can develop risk mitigation strategies for products that are difficult to trace or are at higher risk of non-compliance. This may include EUDR specialized auditing and certification services provided by our sister company SCS Global Services using existing certifications (e.g. FSC, RSPO, RTRS, UTZ) or tailored legality, sustainability & traceability audits.