The EU Deforestation Regulation (EUDR): A Guide for Businesses on Compliance, Due Diligence & Risk Management
Publish Date: April 2, 2025What is EUDR?
The EU Deforestation Regulation (EUDR) ensures that only deforestation-free products are sold in the European market. This means companies must prove their products weren’t produced on land deforested after December 31, 2020, and comply with relevant laws in the country of production.
The goal is to safeguard the world’s forests by prohibiting the sale of products within the EU that contribute to deforestation. Businesses must conduct due diligence to prove their products are “deforestation-free” and comply with the law in the country of production.
Who is affected by the EUDR?
Companies engaged in importing, exporting, and trading commodities covered by the EUDR’s Annex I.
Penalties for violating the EUDR:
EUDR non-compliance can result in Financial Penalties (up to 4% of annual turnover in the EU), EU market bans, Reputational damage, and Supply chain disruptions.
EUDR’s product-specific requirements:
- Deforestation-free – Products not produced on land deforested after December 31, 2020.
- Production methods adhered to all regulations in the country of origin.
- A due diligence statement confirms that the products have undergone the required assessments.
Essential action points for businesses:
- Product Scoping: Unified understanding of HSN codes across all products, linked to transactions & Visibility on indirect material & intercompany transactions.
- Stakeholders’ responsibility: Clear roles and responsibilities for stakeholders will ensure all EUDR compliance tasks are appropriately managed and executed.
- Supply Chain Mapping & Traceability: Identifying and tracing the origin of commodities and products, gathering precise geolocation data, Identify and assessing all actors involved in their supply chains – including farmers, processors, traders, and importers.
- Risk Assessment & Mitigation: Analysing the sourcing locations and production practices to identify potential risks, Evaluating & ranking risks involved, and Developing and implementing mitigation measures to address and minimize identified risks.
- Due Diligence System: Developing and implementing a comprehensive system to collect information, assess risks, take appropriate actions, Gather and verify information, and Maintain records.
- Monitoring & Reporting: Reporting on due diligence efforts that are flexible to changing circumstances, reviewing internal documentation adhering to EUDR compliance.
- Third-Party Verification & Certification: Option to have independent third-party auditors for compliance verification and obtain certifications from recognized agencies.
- Collaboration & Engagement: Collaborating with Suppliers & engaging with stakeholders.
- Technology Partnership: Partner with technology experts to implement software that complements existing infrastructure and facilitates EUDR compliance.
Data elements necessary for EUDR filings: Operator’s information – Name, Address, Economic Operators Registration & Identification (EORI) no.
- Product information – Description with HSN code, Quantity, country of origin, Supply chain custody
- Traceability Information – Geolocation Coordinates of production land, production timelines, Evidence that the commodity or product is deforestation-free and legal
- Risk Assessment and Mitigation Information with Due Diligence Statement
Resource: https://green-business.ec.europa.eu/deforestation-regulation-implementation_en#information-system
Future Anticipated Expansion of Scope
More Commodities – Scope beyond Deforestation – Enhanced Due Diligence Requirements – Increased Enforcement and Penalties – Technological Advancements
