EUDR: An in-depth guide to the EU Deforestation Regulation

EUDR Background

In the last 10 years alone, we have lost our primary forests at an alarming rate of 4 million hectares per year.¹ That is equivalent to an area larger than Bavaria vanishing every two years. The European Deforestation Regulation addresses this issue of deforestation and forest degradation driven by the expansion of agricultural land for producing commodities and their derivatives like leather, chocolate, tires, or furniture. Recognizing its role as a major consumer of these commodities, the EU aims to lead efforts in mitigating deforestation and forest degradation.

Operators or traders dealing with these commodities in the EU market must verify that their products are not linked to recent deforestation or forest degradation or violate environmental and social laws in the producing countries. Only products that meet these requirements are eligible to be placed on the European market or be exported from it.

Products affected by the EUDR

The law concerns deforestation and forest degradation associated with the conversion of land for agricultural use for soy, beef, palm oil, wood, cocoa, coffee, rubber, and their derived products such as leather, chocolate and furniture, charcoal, printed paper, and palm oil derivatives.

EUDR Timeline

Adoption:
June 29^th, 2023: The regulation comes into force. It is now officially a requirement to comply with the regulation, with different dates depending on business size.‍

Implementation period:
Companies are given 18 months to prepare for and implement the new rules. Micro and small enterprises are allowed a longer adaptation period

Entering into force:
December 30^th, 2024: Compliance necessary for large businesses. They will be subject to checks, fines, and potential bans from the EU market should they fail to meet requirements by this date.

The EUDR will apply to all products harvested from June 29^th, 2023, and imported to or exported from the EU market after December 30^th, 2024.

Any wood harvested after June 29^th, 2023, but imported to the EU before December 30, 2024, must adhere to the superseded EU Timber Regulation (EUTR).

EUDR vs EUTR

The new regulation supersedes the EU Timber Regulation that came into force back in 2013. Since the EUDR has a broader scope as well as stricter due diligence requirements, the following table summarizes some of the key differences.

	EUTR	EUDR
Scope	Focuses on timber and timber products	Considers a broader range of commodities linked to deforestation
Due Diligence	Due Diligence is required	Due Diligence demands more stringent transparency, and traceability, including geolocation proof
Legislative Focus	Aims primarily to combat illegal logging	Aims further, addressing deforestation and forest degradation regardless of the legality of the practices involved

The three criteria to be EUDR-compliant

To comply with the new regulation the traded commodities must fulfill three main criteria. In the following, we will examine these three criteria in more detail providing clarity on how to act.

Criterion #1: Products must be deforestation-free

Excerpt from the regulation article

Article 3

Prohibition

Relevant commodities and relevant products shall not be placed or made available on the market or exported, unless all the following conditions are fulfilled:

they are deforestation-free;
they have been produced in accordance with the relevant legislation of the country of production; and
they are covered by a due diligence statement.

The term "deforestation-free" means that relevant products and their raw materials are sourced from areas not affected by deforestation or forest degradation after December 31, 2020.

To properly address this requirement, the regulation provides definitions:

Relevant Raw materials: Cattle, cocoa, coffee, oil palm, soya and wood
Relevant products: Annex 1 of the regulation provides an extensive list of all commodities in scope deriving from the raw materials mentioned above. They include leather, chocolate and furniture, charcoal, printed paper, and palm oil.
Forest: The regulation defines forests as land spanning more than 0.5 ha with trees higher than 5 meters and canopy coverage of more than 10%.
Deforestation: Conversion of forest to agricultural land. The law furthermore states that this applies whether the deforestation occurred human-induced or not. This means that land deforested without human influence (e.g., through an extreme weather event) also falls under the regulations’ scope and cannot be used to produce the listed commodities.
Forest degradation: The change from primary or naturally regenerating forests to plantation forests or planted forests.
- Primary forest in this context means a naturally regenerating forest of native tree species without indications of human activities or disturbance of the ecological processes.
- Naturally regenerating forests refers to forests primarily made up of trees that have grown on their own, without deliberate planting. This term covers
  - Forests where it's unclear whether trees were planted or self-grown,
  - Forests combining self-grown native trees and those planted or seeded (with the self-grown trees being predominant at maturity),
  - Areas of coppice originating from self-grown trees, and forests of non-native tree species that have regenerated naturally

Excerpt from the regulation article

Article 2

Definitions

that the relevant products contain, have been fed with or have been made using, relevant commodities that were produced on land that has not been subject to deforestation after 31 December, 2020; and
in the case of relevant products that contain or have been made using wood, that the wood has been harvested from the forest without inducing forest degradation after 31 December, 2020;

Criterion #2: Products must be produced in accordance with the relevant legislation of the country of production

The EUDR goes as far as incorporating the laws applicable in the country of production in the realms of

Land use rights.

Environmental protection.

Forest-related rules, including forest management and biodiversity conservation, were directly related to wood harvesting.

Third parties’ rights.

Labor rights.

Human rights protected under international law.

The principle of free, prior, and informed consent (FPIC), including as set out in the UN Declaration on the Rights of Indigenous Peoples.

Tax, anti-corruption, trade and customs regulations.

Criterion #3: Products must be covererd by a due diligence statement

The Due diligence statement is divided into three sections. Operators must document the collected information, the risk assessments as well as the risk mitigation, review them annually and make them available to authorities upon request.

Section 1: Collecting information

The EUDR requires companies to collect information about their products and provide insights on:

The type of products and that they are 1) deforestation free and 2) have been produced in accordance with the laws in the production country. This information must be kept for at least five years.

Details such as the trade name, the quantity in kg, as well as the country of production and contact information of the products’ supplier and recipient.

If the product is or contains wood, the common name of the species as well as the full scientific name.

The geolocation of all plots of land where the product or parts of it have been produced or held – in the case of cattle.

Section 2: Conducting a risk assessment

The regulation entails plans to develop a three-tier system to assess the countries' risk levels. So far, each country has been assigned a "standard" risk. High-risk and low-risk profiles will be added as further classifications. This taxonomy has not yet been published but the law states that the EU will communicate it until at the latest December 30^th, 2024.

Besides the country risk level, the assessment must include the following:

Presence of forests and indigenous peoples in the production country.

Cooperation with indigenous peoples and their claims over land use or ownership.

Prevalence of deforestation or forest degradation.

Reliability and validity of information sources.

Country-specific issues like corruption, human rights violations, and conflicts.

The complexity of the supply chain and tracing product origins.

Risks of regulation circumvention or mixing goods with products of unknown origin.

History of non-compliance in the supply chain.

Note: Wood products with a valid FLEGT license are compliant

Section 3: Implementing risk-mitigation mesures

If a risk assessment shows any non-compliance risk, operators must adopt effective risk mitigation procedures before marketing or exporting products. These include:

Requesting additional information or documents.

Conducting independent surveys or audits.

Implementing measures related to information requirements.

Supporting suppliers, especially smallholders, to comply through capacity building and investments.

Operators must have policies and controls to effectively manage non-compliance risks. This includes:

Implementing risk management practices, reporting, record-keeping, and compliance management.

Appointing a compliance officer at the management level (for non-SME operators).

Establishing an independent audit function to review internal policies and controls (for non-SME operators).

How The Landbanking Group addresses the EUDR

In our flagship platform Landler.io, we just launched a deforestation indicator that helps companies understand whether land has been affected or not by deforestation.

We use best practice data from the GLAD Global Forest Cover Change dataset, developed and maintained by the Global Land Analysis and Discovery Group. This collaboration enables us to indicate whether or not the measured land polygons have been deforestation-free since 2021.

Our Indicator defines a forest as an area of trees greater than 5 m in height and can detect deforestation in an area of 30x30m or greater.

Even if the geodata originates from the present, statements can be made about the past to cover the legal deforestation date of 31.12.2020. For that, only the GPS coordinates of the polygon are required. These can be determined and provided even by smallholder farmers using a smartphone. The results of the data can be integrated into the due diligence report that must be made available when importing the products concerned.

You can try the deforestation indicator by signing up for a free beta account on our platform Landler.io.

FAQs

What happens if one part of a shipment is non-compliant?

If a shipment contains non-compliant items, these must be identified and separated from the compliant ones before the shipment is marketed or exported. If separation is impossible, such as when non-compliant products are mixed with others, then the entire shipment is considered non-compliant. The EU gives an example: If you have a mixed shipment from several hundred plots of land and one plot has been deforested after 2020, this could render the whole shipment non-compliant.

What if my import contains a mix of deforestation-free commodities with those of unknown origin?

The Regulation mandates that all products within its scope must be traceable to their original plot of land. It does not allow mass balance chains of custody, which mix deforestation-free commodities with those of unknown origin or non-deforestation-free commodities at any supply chain stage.

Can producers simply map their own land?

Yes. Small-scale producers who don’t directly engage in selling their products within the EU market are not subject to this Regulation, as they are not classified as operators or traders. For goods originating from outside the EU, the responsibility mainly lies with the business introducing these products to the EU market. This business must ensure and verify that the precisely mapped and geographically identified area aligns with the actual location where the products were cultivated or manufactured.

How can larger operators and traders get geolocation data for lands in countries without property registers, especially from farmers who might not have IDs or land titles?

Farmers can use mobile phones to collect the geolocation data of their land. This method doesn't require a land registry, IDs, or land titles, and no personal information from the farmers, except if they are direct suppliers. Operators use different methods to collect geolocation and legality information, such as mapping suppliers directly and working with intermediaries like cooperatives, certification bodies, national traceability systems, or other companies.

Regardless of the method used, operators are legally responsible for the accuracy of the geolocation and legality information.

If farmers are legally farming and selling their produce under their national laws, even without formal IDs or a property register, operators can generally meet the legal requirement. However, operators must ensure there is no risk of illegality in their supply chains.

How does traceability for cattle work? Would it be enough to provide the geolocation of the land where the calf was born? Some cattle may be moved to one or more locations before slaughter.

For bigger companies (excluding small and medium-sized ones) selling cattle products, they must provide the locations of all the places involved in raising the cattle. This means they need to record where the cattle were born, the farms where they were raised and fed, the fields where they grazed, and the slaughterhouses where they were eventually processed.

What happens with goods produced on public or communal land that do not fall within the concept of “real-estate property”?

The Regulation mandates that commodities sold in the European Union market or exported from it must originate from a specific plot of land. Even if there is no land registry or formal ownership document, land that is actually used for production or harvesting can still be designated as a plot of land for this purpose.

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