In the context of the new European regulations, specifically EU Regulation 2023/1115 – EUDR (European Union Deforestation Regulation) on deforestation and forest degradation, EU companies distributing or producing products associated with deforestation are responsible for meeting strict requirements for supply chain traceability and monitoring. EUDR targets key products such as palm oil, soy, cocoa, coffee, and wood, which contribute to deforestation and forest degradation unless sourced from controlled origins.
The main objective of EUDR implementation is to reduce greenhouse gas emissions by limiting deforestation and encouraging the consumption of deforestation-free products, thereby minimizing the negative impact on natural ecosystems.
To comply, companies must follow several essential steps:
- Identify and monitor regulated products, requiring detailed analysis of each raw material in the supply chain to ensure compliance with EUDR norms.
- Assess and manage risks by implementing risk assessment processes to identify areas in the supply chain with deforestation risks.
- Obtain compliance documentation, where suppliers must provide documents demonstrating adherence to national laws in the countries of origin of raw materials. Periodic checks ensure continuous compliance.
- Ensure transparency regarding raw material origins down to their exact source, through systems that monitor geographical coordinates of production areas and the date when the land was used for agriculture, providing evidence that raw materials meet environmental standards.
- Declare due diligence as required by the current EUDR regulation, with companies periodically submitting statements to EU authorities documenting raw material compliance. Declarations include information on origin and risk assessments.
- Conduct internal audits and regular reviews of supply chains to ensure compliance with EUDR requirements.
In case of non-compliance, companies must take immediate corrective actions, which may include employee sanctions, adjustments in procurement policies, or even ending collaborations with non-compliant suppliers. Additionally, companies must cooperate with regulatory authorities during inspections, annually reporting control plans and risk criteria to demonstrate compliance. Non-compliance with EUDR can lead to financial penalties or even confiscation of goods, impacting the company’s reputation.
EUDR significantly impacts how companies manage their supply chains but also offers substantial benefits, such as improved reputation through genuine environmental commitments and preferential access to European markets for compliant products. In the long term, these measures support sustainable business practices, protect biodiversity, and contribute to a more transparent and eco-friendly supply chain.
For further information or any additional inquiries, please do not hesitate to contact us:
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Mihaela Murariu – Attorney at Law
