The European Union Deforestation Regulation (EUDR) is a new supply chain sustainability regulation that continues the trend of introducing responsible sourcing practices into compliance requirements. This includes requirements for establishing a framework of procedures to conduct due diligence and collect environmental, social, and governance (ESG) data as well as annual risk assessment documentation. Failing to meet these requirements means having your in-scope products removed from the market, brand damage, and the potential loss of future contracts.
This article provides a short overview of the EUDR, and importantly, what it signals about the future of the EU regulatory landscape.
What Is the Goal of the EUDR?
The EUDR is designed to mitigate global deforestation risks by enforcing responsible sourcing practices, with EU market access as the leverage.
It requires supply chain due diligence and reporting to ensure that products:
- Are deforestation-free, meaning they are not a result of the conversion of forest to agricultural use, whether human-induced or not
- Have been produced in accordance with the relevant legislation of the country of production
- Are covered by a due diligence statement
To support these outcomes, the EUDR also requires that in-scope manufacturers establish processes for collecting sustainability risk data from their supply chains and that collected risk assessment data is reviewed annually. Any manufacturer that becomes aware of a deforestation risk must inform the competent authorities of any EU member states in which they’ve put non-compliant products on the market.
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EUDR Fundamentals: Scope & Timelines
The EUDR encompasses a broad range of commodities, including:
- Cattle
- Cocoa
- Coffee
- Oil palm
- Rubber
- Soya
- Wood.
Additionally, the regulation extends to a wide variety of derived products, including (but not limited to):
- Meat products
- Leather
- Chocolate
- Coffee
- Palm nuts
- Derivatives of palm oil
- Glycerol
- Products made from natural rubber
- Pulp and paper goods (e.g., printed books)
However, this does not extend to goods made solely from recycled material that would otherwise be sent to landfill.
The EUDR applies to products manufactured on or after June 29, 2023. Notably, the existing Regulation (EU) No 995/2010 for timber and timber products, will remain in effect until December 31, 2027. Timber products produced before June 29, 2023, and placed on the market starting from December 31, 2027, will need to comply with this new regulation.
EUDR Risk Assessments: Supply Chain Data at Work
Supply chain risks are the main focus of the EUDR, with particular due diligence around the presence of forests and indigenous peoples in the material’s country of origin. In-scope manufacturers will need to collect a broad range of responsible sourcing information, including (but not limited to):
- The consultation and cooperation in good faith with indigenous peoples
- Prevalence of deforestation or forest degradation in the country of production
- Potential for ethical issues within the country of production, including corruption, document or data falsification, human rights violations, and even the presence of armed conflict or sanctions imposed by the UN Security Council or Council of the European Union.
- Complexity of the supply chain and the stage of processing of the relevant products, as well as difficulties tracing materials back to the plot of land where the commodities were produced
The task of risk assessment is not a one-and-done deal but a continuous process with annual reviews to account for any changes and make necessary improvements. This documentation must be made available to the competent authorities upon request, underscoring the growing importance of transparency and accountability in business operations.
A Larger Regulatory Trend: Responsible Sourcing
While the EUDR has the potential to disrupt many supply chains, an even more important takeaway for businesses is the need for proactive supply chain due diligence that goes deeper into supplier data than the previous generation of product compliance regulations.
Like with the evolution from conflict mineral reporting to responsible mineral sourcing, manufacturers in scope of the EUDR are being met with heightened regulatory expectations that go beyond basic data collection. Going forward, they’ll need to reliably quantify impacts and externalities in their supply chains. And that means a whole new approach to supply chain sustainability management. Responsible sourcing is an emerging requirement that isn’t just part of the EUDR — it’s entirely changing the way regulations are being created.
Here’s how to get proactive about responsible sourcing:
- Monitor upcoming and new regulations for data collection requirements and assess if your program currently meets them.
- Update your supply chain outreach and surveys, and begin engaging suppliers early. They’ll need time to collect the data, especially for new or complex asks.
- Educate suppliers about new data requirements and make them partners in compliance.
Improving Your Due Diligence System
The EUDR requires in-scope manufacturers to ensure they have a robust due diligence program in place. The most effective way to quickly achieve this is to invest in a supply chain sustainability management platform that enables you to collect, standardize, and analyze supplier information. This will help you identify risks in your supply chain, while also providing evidence of compliance when required.
Assent’s solution provides the confidence and assurance you need to stay ahead of regulations like the EUDR. Our platform enables you to:
- Streamline supplier engagement by using a single portal for interactions with your suppliers
- Automate data collection through our survey templates and validation rules
- Collect ESG data from suppliers to support responsible sourcing due diligence
Get ahead of the responsible sourcing curve. Download our guide, Uncovering Hidden ESG Risks in Your Supply Chain, to kickstart your program.
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