The EU Regulation for Deforestation-Free Products (EUDR)

Sometimes, for personal convenience or economic interests, we all tend to neglect the fact that the earth is our habitat. Between the years 1990 and 2020, 420 million hectares of forest were cut down worldwide, an area as large as the entire ^EU1. A frightening figure when you consider that forests are the basis of our existence and provide a home for many creatures.

The EU Regulation on deforestation-free products (EU Deforestation Regulation (EUDR) or EU Regulation on deforestation-free supply chains) therefore obliges companies, farmers and ^forest owners2 to fulfill special verification obligations for the supply and trade of the selected raw materials cattle, cocoa, coffee, oil palm, rubber, soy and ^wood3 as well as the products made from them by the end of 2024. The verification requirements are intended to ensure that no products are traded in the EU that have contributed to deforestation or forest degradation. The regulation is part of the European Green Deal Strategywith which the EU member states aim to achieve climate neutrality in Europe by 2050.

The global climate crisis has devastating consequences for us humans, but also for plant and animal life. The European Commission sees global warming and biodiversity loss as the two most important environmental challenges of our ^time4 and is therefore striving to minimize their impact. In this context, deforestation and forest degradation in particular also increase greenhouse gas emissions "through associated forest fires, the permanent removal of carbon sink capacity, the reduction of the affected area's resilience to climate change and the significant reduction of its biodiversity and resistance to diseases and pests "⁵.

Forests are the habitat of numerous species and fulfill important functions such as filtering air and drinking water or ensuring soil and flood protection, making them true climate heroes. But forests also play an important role for the economy due to their economic benefits, e.g. as a supplier of raw materials for consumer goods, so that binding regulations for ecologically responsible business practices are necessary.

The Regulation concerns ^operators6 and ^{distributors7} of the products concerned. In this context, an operator is defined as "any natural or legal person who places on the market or exports relevant products in the course of a commercial activity^"8, while a distributor is characterized as "any person in the supply chain, other than the operator, who makes relevant products available on the market in the course of a commercial activity^"9. In more concrete terms, placing on the market means "the first making available of a relevant raw material or relevant product on the Union market^"10 and making available on the market includes "any supply of a relevant product for distribution, consumption or use on the Union market in the course of a commercial activity, whether in return for payment or free of charge^"11. The "commercial activity" component includes all types of activities "for the purpose of processing, for distribution to professional or non-professional consumers or for use in the business of the operator or distributor itself^"12. Where third countries are included, the "first natural or legal person established in the Union to make those relevant products available on the market^"13 assumes the role of operator and is also subject to the following requirements.

Business operators and traders must ensure that the relevant goods and products placed on the market, made available or exported meet three conditions.

1. They must be "deforestation-free^"14.
2. They must be "produced in accordance with the relevant legislation of the country of production "¹⁵.
3. They must be covered by a "declaration of due diligence "¹⁶.

This due diligence obligation must be fulfilled "before operators place, make available on the market or export relevant products^"17 and comprises three components: the collection of information, data and documents to fulfill the requirements in Article 9, the risk assessment measures according to Article 10 and the risk mitigation measures according to Article ¹¹¹⁸. Article 9 contains, for example, a detailed description, including the quantity of relevant products, the country of production (its regions, if applicable), the geolocation of relevant objects in the process, contact details of suppliers and subcontractors, proof of freedom from deforestation and proof of compliance with the legal requirements of the country of production. Articles 10 and 11 require the analysis, documentation, measures and procedures to identify and address (potential) risks of non-conformity.

Due diligence, including product and process-specific information, data and documentation, risk assessment measures, and risk mitigation measures, is required for all activities involving the selected products on the Union market and for export from the ^Union21.

Because of the many requirements, companies should first familiarize themselves with the regulation and consider whether they can meet the due diligence obligations under the regulation with their own resources or whether external support is needed. The content requirements for data collection, storage, and processing, as well as the technical requirements for data exchange across different information systems and stakeholders, are requirements that need to be met within the remaining time.

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