The EU Regulation on Deforestation-Free Products (EUDR) is a policy adopted by the European Union to combat deforestation and forest degradation in global supply chains. It ensures that certain commodities and products placed on the EU market or exported from it are free from deforestation or forest degradation and comply with strict sustainability standards.
Timeline
Originally scheduled to apply to the first set of companies on 30 December 2024, the European Parliament and the Council of the EU approved the postponement of the EUDR application date by one year.
Goals of the EUDR
The EUDR aims to reduce the EU’s contribution to global deforestation and forest degradation by:
- Banning products linked to deforestation or forest degradation.
- Protecting biodiversity and reducing greenhouse gas emissions.
- Promoting sustainable practices across global supply chains.
Who is Affected by the EUDR?
The EUDR applies to a broad range of companies, including:
- Operators placing commodities such as oil palm, soy, wood, cocoa, coffee, cattle, rubber and some of their derived products on the EU market.
- Traders handling these commodities and related products.
- Companies exporting relevant products from the EU.
- Both SMEs and large businesses operating in supply chains.
The regulation also impacts third countries by influencing production standards and contributing to global efforts to combat deforestation.
Challenges for Companies
Under the EUDR, companies face several challenges, including:
- Implementing rigorous due diligence processes to trace products back to the plot of land where they were produced.
- Collecting accurate geolocation data and adhering to stringent documentation requirements.
- Ensuring transparency across complex global supply chains, from raw materials to finished goods.
- Maintaining detailed records and regularly reporting on due diligence activities.
Potential Penalties and Sanctions
If companies fail to meet the required due diligence obligations, they will be prohibited from placing regulated commodities and products on the market. In addition to reputational damage, violations of the regulation expose companies to significant financial risks, including:
- Fines of at least 4% of the company’s annual turnover in the EU.
- Temporary bans on importing, making available, or exporting relevant commodities and products.
- Up to 12 months exclusion from public procurement processes and access to public funding.
- Confiscation of non-compliant products and any revenues generated from transactions involving those products.
- Loss of access to simplified due diligence procedure in case of serious or repeated infringements.
How IntegrityNext Helps Companies Achieve EUDR Compliance
IntegrityNext simplifies compliance with the requirements of the EUDR through an end-to-end solution that is tailored for both operators and traders. Our platform automates the collection and verification of supplier data, while also conducting risk analysis based on geolocation and the forthcoming EU country benchmarking system.
With IntegrityNext, businesses can manage EUDR compliance with minimal effort, minimize the risk of disruptions due to non-compliance, and ensure their operations and supply chains remain deforestation-free.