Milena Kazanowska-Kędzierska dispels doubts about the EU deforestation regulation.
What are the main challenges and concerns for companies?
Many questions about the EUDR relate to due diligence. Companies are also looking for practical ways to simplify procedures.
So our expert explains what the new obligations are, who they affect and whether there are ways to make things easier for companies.
What is the obligation of due diligence?
Milena Kazanowska-Kędzierska
Under the Regulation, companies acting as operators or traders are subject to the obligation to exercise due diligence. This is an obligation to demonstrate that the relevant commodities and products that the company places or makes available on the market or exports from the EU meet three basic requirements:
- Their production has not contributed to deforestation
- They have been produced in accordance with the legislation of the country of origin
- They are covered by a due diligence statement
In practice, companies should, among other things, put in place and review at least annually a due diligence system, i.e. a set of procedures and measures to ensure on an ongoing basis that their products are ‘safe’ in the regulatory sense.
Such a system consists of three main components:
The first is the collection of relevant information, data and documents, including:
- Product details (what it is, where it comes from)
- Supplier details
- Evidence that the product is compliant
The second part of the system is risk assessment, i.e.:
- Checking whether there is a risk of infringement
- Identifying vulnerabilities in the supply chain
The final piece of the puzzle consists of security measures and actions, i.e.:
- Implementing risk-reducing procedures
- Regular checks on suppliers
- Documenting all actions
It is also important to remember that the duty of care applies to all relevant products supplied by a particular supplier.
Does the EUDR provide for simplifications in the implementation of due diligence?
Yes, if companies can demonstrate that their goods originate from a ‘safe place’, i.e. a low risk country,[i] they can exercise the so-called ‘simplified due diligence’. In this situation, they are not required to comply with the obligations to assess and mitigate the risk of infringement.
A list of low, standard and high risk countries is to be drawn up by the European Commission by 30 December 2024.
Worth remembering
If a company suspects that the commodities or products it is dealing with do not comply with the EUDR, it should revert to complete control and communicate any relevant information to the competent authorities.[ii]
See also:
Eco Focus #2 on the penalties and consequences for companies that do not comply with the regulations and the system of checks.
Eco Focus #1 on the basic concepts and the list of products covered by the new regulations.
Any questions? Contact us
[i] In accordance with Article 29 of Regulation 2023/1115.
[ii] or that the Regulation is circumvented, the operator shall fulfil all of the obligations under Articles 10 and 11 and shall immediately communicate any relevant information to the competent authority. Where a competent authority is made aware of any information that would point to a risk of circumvention of this Regulation, including in cases in which relevant commodities or relevant products produced in a standard-risk or high-risk country or a part thereof are subsequently processed in a low-risk country or a part thereof from where they are placed on or leave the market, the competent authority shall take immediate action in accordance with Article 17(1) and, where necessary, adopt interim measures in accordance with Article 23.
