EU Deforestation-Free Regulation (EUDR): A Big Game-Changer for Sustainable Trade

The European Union is taking a significant step towards combating deforestation and promoting sustainable trade with the implementation of the EU Deforestation-Free Regulation (EUDR). Under this regulation, companies will only be permitted to sell specific products within the EU if their suppliers provide a “due diligence” statement ensuring that the products are not sourced from deforested land or have contributed to forest degradation.

The products covered by this legislation include cattle, cocoa, coffee, palm oil, soya, and wood, as well as products containing or made using these commodities. In addition to verifying compliance with relevant legislation in the country of production, companies must also ensure that the rights of indigenous people affected by the production process have been respected.

To facilitate the enforcement of this regulation, the European Commission will classify countries or regions as low-, standard-, or high-risk based on a transparent and objective assessment. A risk-based control system will be established, with different levels of due diligence checks based on the risk associated with specific countries. The competent EU authorities will have access to relevant information provided by companies, employ satellite monitoring tools, and conduct DNA analyses to verify the origin of products.

Non-compliance with the regulation will result in proportionate and dissuasive penalties, with fines potentially reaching up to 4% of the non-compliant operator or trader’s total annual turnover in the EU.

While the EUDR represents a significant milestone in the fight against deforestation and the protection of human rights, it also poses challenges for companies. Sourcing raw materials may become more complex, cost breakdowns and product margins may require further analysis, and identifying key technologies and partners for traceability becomes crucial. Companies must screen their supplier base, develop or update Supplier Codes of Conduct, and adapt their supply chains to comply with evolving regulatory requirements.

The EU’s commitment to combating deforestation and promoting sustainable trade sets a powerful example for the global community, encouraging responsible practices and protecting our planet’s invaluable forests.

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