Deforestation and forest degradation contribute negatively to climate change and therefore represent one of today’s most pressing environmental challenges. Against these worrying phenomena, Europe has undertaken a policy of safeguarding and controlling what is produced and marketed within its borders. The Eudr (European Deforestation-free products Regulation) is the new EU regulation that aims precisely at this. The system is ready, but the European Commission has proposed a further 12-month extension for its implementation. In the meantime, let’s see what it consists of
It is called Eudr (European Deforestation-free products Regulation) and it is the new European Union regulation on deforestation, to be precise it is Regulation (EU) 2023/1115. Once implemented, it will replace the current Regulation 995/2010 Eutr (European Union Timber Regulation).
Both are the product of Europe’s strongly supported policy to combat deforestation and forest degradation. Specifically, the new regulation aims to ensure that several key goods placed on the EU market no longer contribute to deforestation and forest degradation, not only in the EU but also in the rest of the world.
In order to understand its facets and what companies should expect with its implementation, Lifeanalytics, with its team of consultants dedicated to the interpretation and implementation of national and international safety and quality regulations, organised a webinar, as part of its “AULA 2030” activities, entitled “Eudr News. What are the new obligations for companies”.
What the Eudr provides
The new regulation, Lifeanalytics consultants emphasised during the online meeting, aims to combat deforestation and forest degradation by obliging European companies to carry out more rigorous due diligence throughout the supply chain.
It has been mentioned how it will replace the Timber Regulation – albeit with a period of coexistence – compared to which it represents a step forward. An important new feature is that, unlike the Eutr, which only covered timber, in the new regulation the spectrum of materials covered by the regulation – Annex I of Reg. (EU) 2023/1115 – is significantly larger. The concept of deforestation risk now covers the production of more products and thus involves more sectors. Specifically, in addition to wood, rubber, oil palm, cocoa, coffee, soya and cattle are also mentioned.
In addition, with regard to the products relevant to the regulation, the nomenclature also increases for wood products – indicated, in what is now the latest version of the regulation, by the numbers 4401 to 4421 – which therefore also include pulp and paper from Chapters 47 and 48 of the Combined Nomenclature under the heading “Other articles of wood”, with the exception of bamboo products and materials for recycling; and ex 49, i.e. printed books, newspapers, pictures and other printed products; manuscripts, typescripts and plans, of paper.
The current version of the Eudr also includes some chapters dedicated to rubber to which, if this part remains unchanged, companies will have to pay attention. They refer specifically to natural rubber materials, but also include those containing a percentage of natural rubber. Similarly, references to oil palm, which also covers its derivatives for industrial use, are also important.
The key points of the Eudr
In the new regulation, therefore, certain concepts are taken over from the Eutr and further reiterated. Obviously, the obligations for companies are also made explicit. In particular, the obligation to perform due diligence involving the assessment of deforestation and human rights risks, and the obligation to provide due diligence declarations (DDS) to customs authorities. DDS must be submitted through a new EU information system.
Another obligation is the transparency of the supply chain, the downstream communication of all information necessary to demonstrate that due diligence was exercised with no or negligible risk. In addition, it is mandatory to provide complete documentation of the material to be exported from the EU, to demonstrate that a deforestation risk assessment has been carried out, considering the entire pathway from the forest; the obligation also includes – and this is a novelty of the new regulation – the geolocation of the cutting areas. Documentation that must then be carefully stored.
Companies are expected to comply with all of this in a short period of time. However, initially scheduled to be implemented by 31 December 2024, the implementation of the Eudr Regulation will be postponed by twelve months by the European Commission in order to allow all stakeholders to adequately and gradually prepare for its implementation.
Obligations for SMEs and large enterprises
At the moment, it is not possible to know whether the postponement desired by the European Commission will also lead to any changes in the text of the regulation, but there are some outlines that can already be considered.
First of all, the Eudr includes obligations for both large companies and small and medium-sized enterprises (SMEs). There are specific rules depending on the role a company may have in the marketing of products covered by the regulation, i.e. whether it is an “Economic Operator” or a “Trader” Eudr.
The regulation therefore speaks of importing products coming from non-EU countries; of placing on the market or making available for the first time on the Union market a material or product covered by the regulation; of processing products covered by the regulation into a new product, which concerns the production of a new product subject to Eudr by using others already on the market; of making available on the market or supplying a product for distribution, consumption or use on the market, which takes place in the course of a commercial activity or free of charge. And, again, of export of products covered by the regulation leaving the European market.
One more year to apply the Eudr
As mentioned above, one step away from its implementation, which should have taken place by the end of the year, the introduction of the Eudr was postponed.
At the beginning of October, the European Commission proposed giving stakeholders more time to prepare, i.e. an additional twelve months of phasing-in. This additional time, reads the European Commission’s press release, would serve to “ensure a proper and effective implementation” of the system. After all, “the implementation tools are technically ready” and it is also reiterated that the proposed extension in no way calls into question the objectives or substance of the law; rather, what is lacking is a homogeneity in the level of preparation achieved by the various parties involved.
In practice, the extra time allowed would mean that the law would become applicable on 30 December 2025 for large enterprises and on 30 June 2026 for micro and small enterprises (traders).
At the same time, the European Commission has also published further guidance documents that aim to provide greater clarity for businesses and law enforcement authorities to facilitate enforcement.
The decision to postpone was due to the concern expressed by several parties – especially international partners – about the actual state of preparedness achieved. It was also noted that even within Europe, the degree of preparedness differs from country to country. In essence, the European Commission reiterated the need to prepare a more solid framework for international cooperation.
The Commission’s Guidelines
The guidance documents presented by the European Commission go into greater detail on the functionality of the information system, penalties, traceability obligations; and clarifying definitions that can be critical such as “forest degradation”, “operator” and “placing on the market”. In all, there are 11 chapters covering a wide range of issues such as legality requirements, timeframes, agricultural use and clarifications on product definition.
The FAQ section was also enriched with the addition of more than 40 new answers on various topics.
The section on the Commission’s website dedicated to information for the public was also updated and reorganised.
The Commission, in early October, then published the principles of the methodology it will apply to the Eudr benchmarking exercise. This, the press release goes on to say, serves to classify countries as “low”, “standard” or “high risk” in order to facilitate operators’ due diligence procedures and enable competent authorities to effectively monitor and enforce compliance.