TABLE OF CONTENTS

Introduction. How did the EUDR come into existence and why is it important? 1
The importance of forests 2
Drivers of deforestation 3
EUDR Timeline. What are the most important dates? 5
EUDR Products. What are the products affected by EUDR? 8
EUDR Market players. Who are the market players affected by EUDR? 10
Who are the operators? 11
Who are the traders? 13
EUDR Requirements. What must EUDR actors do? 14
Who must exercise due diligence? 17
When a company is both operator and trader 18
What does it mean to exercise due diligence? 19
The Due Diligence Steps 20
Data collection 20
Risk Assessment 24
Risk Mitigation 26
What to do after due diligence? 28
Exceptions related to operators’ requirements 31
What must SME traders do? 32
Setting up and maintaining the due diligence systems 33
Competent Authorities’ Checks 35
What happens if the competent authorities find you non-compliant? 38
Global Traceability Solutions 41
RADIX Tree 41

FOCUS POINTS
EUTR Timeline 7 Authorised representatives 32
What Is The “Relevant Legislation”? 15 The EU Information System 34
Simplified Due Diligence 30 Need of immediate action 37
Introduction
How did the EUDR come into existence and
why is it important?

The European Union has issued the EU The Regulation sets out criteria for
Deforestation-free Regulation (EUDR) what can be considered deforestation-
with the objective to reduce its impact free products, requiring companies to
on deforestation and forest implement sustainable sourcing
degradation. It is part of a broader practices and traceability measures to
initiative, called the European Green ensure that their supply chains do not
Deal, which consists in a set of contribute to deforestation.
proposals to cut emissions by at least
55% before the end of 2030 and to By promoting transparency and
reach net-zero emissions by 2050. accountability in the production of key
commodities, the EU aims to reduce the
EUDR has being acclaimed as a break- pressure on forests and protect
through legislation that is expected to biodiversity.
have a strong positive influence on the
environment and to be the forerunner EUDR is a significant step
for other similar initiatives in the rest of taken by the European Union
the world. to promote sustainable
development.

1
The importance of forests
Forests offer a large range of environmental,
economic and social benefits that are
fundamental for human life. They protect
entire ecosystems, provide clean air and
prevent biodiversity loss, along with playing
a vital role in water retention, purification
and recharge. Forests are also responsible
for the subsistence and income of one third
of the world’s population.

It goes without saying that deforestation

hectares of forest lost worlwide
and forest degradation have serious
between 1990 and 2020.
consequences not only on the global climate
crisis, by reducing carbon sinks and altering
water cycles, but also on the livelihoods of
vulnerable communities, including local
inhabitants and indigenous people.

It is alarming that this phenomenon is taking

place at a breakneck rate. According to the
Food and Agriculture Organization of the
United Nations (FAO), between 1990 and
2020 an estimated of 420 million hectares
of forest, an area larger than Europe, has hectares of forest lost on average
been lost worldwide. per year from 2015 to 2020.

On average 5 million hectares of forest per

year from 2015 to 2020. On top of that, due
to increases in global consumption, the
deforestation rate is expected to rise even
further in the upcoming years. 2
Drivers of deforestation
The reasons behind deforestation and Nevertheless, the main drivers for
forest degradation are intricate and deforestation are identified in the
vary depending on the location. commercial and the local or subsistence
agriculture, mining, infrastructure
Direct causes are linked to a complex extension and urban expansion.
array of underlying factors, including a
range of political, cultural and socio- On the other hand, forest degradation
economic conditions, making it is mainly pushed by logging, fires,
challenging to determine the exact overgrazing in forests, fuel wood
shares of their responsibility. harvest and charcoal production.

Agriculture alone accounts for almost 80% of world

deforestation, 95% of which takes place in tropical areas.

Pie Chart.
DRIVERS OF DEFORESTATION

The pie chart depicts the different percentages Mining

7%
related to the impact of the main deforestation Urban
Expansion
drivers. The data are taken from the impact
10%
assessment produced by the European Commission
Commercial
in 2021 alongside the initial proposal for EUDR. Agriculture
Infrastructure
40%
10%
The study considered 46 tropical and subtropical
countries, and discovered that agriculture alone is
responsible for 73% of global deforestation, of which
40% due to commercial agriculture and 33% due to
local or subsistence agriculture. Infrastructure Subsistence
accounts for 10%, urban expansion for 10%, and Agriculture
33%
mining for 7%.

3
The European Union is one of the biggest
market players in global consumption and
responsible for 10% of worldwide
deforestation. Following a study about the
commodities with the highest EU-driven
impact on deforestation and forest
degradation, the EU Parliament decided to
regulate the commercialisation of
commodities whose production is linked to
deforestation and forest degradation by
extending the scope of EUTR to other
products, namely palm oil, soy, cocoa,
coffee, cattle and rubber, and to add
freedom from deforestation as an additional
core requirement for legality.

This marked the birth of the EU

Deforestation-free Regulation (EUDR), with
the aim to reduce the impact of products
purchased by Europeans on the world's
forests and wooded areas, ultimately cutting
down GHG emissions and biodiversity loss.

global

is linked to annual EU consumption.

4
EUDR Timeline
What are the most important dates?

The first proposal for EUDR was passed On 2nd October 2024, the European
by the EU Commission in 2022 and Commission proposed to delay EUDR’s
became active on 29th June 2023. The application by one year, due to the
initial timeline dictated that the unreadiness of involved parties, the
implementation by EU member states Regulation's unique nature and strong
should have applied starting from 30th international pressures. After months of
December 2024. Micro and small negotiations among the EU institutions
enterprises would instead enjoy a and political parties, on 23rd December
longer adaptation period, as they will 2024, the proposed one-year delay and
have time until June 2025 to prepare. other amendments passed into law.

EUDR Timeline.
THE MAIN DATES

These are the important dates related to EUDR enforcement. They take into account the postponement
as recently voted by the EU institutions and published in the EU Official Journal on 23rd December 2024.

29th June 2023 30th December 2025 30th June 2026 June 2028
EUDR comes into EUDR starts applying EUDR starts applying Authorities review
force to large & medium to small & micro EUDR for
companies companies improvement
5
EUDR delay and other amendments
The amendments published in the EU Reduction of administrative burdens. It
Official Journal are listed below. will provide material and information to
ease the EUDR adoption, including new
EUDR Delay. The EUDR was postponed simplifications, updated Guidelines and
by one year, with current deadlines FAQs, supporting documentation and
being 30th December 2025 for large constant communication with the
and medium companies and 30th June stakeholders involved.
2026 for small and micro enterprises.
EU IT system readiness. It will ensure
EUTR Repeal Deadlines. Also the EU that the IT system “EU TRACES” for the
Timber Regulation (EUTR) repeal dates upload of the Due Diligence Statements
were affected by the delay, as seen in and the management of communication
the next Focus Point. with authorities is ready by 30th June
2025, at the latest.
Benchmarking Risk Classification. The
EU Commission must publish the Simplification of country requirements.
benchmarking risk system before 30th During the review phase that is
June 2025, to provide a transparent currently planned before 30th June
environment for EUDR actors. 2028, it will evaluate possible measures
to simplify the requirements based on
The next paragraphs, instead, describe specific risk levels, especially in case of
what the Commission committed to do, countries that can demonstrate to have
as requested by the Parliament. "achieved positive results".

6
4
The original text (Article 34, par. 2) also However, the latest EUDR updates do
stated that before the end of June not contain any references to this topic.
2025, the EU was supposed to assess
the impact and potential development As mentioned, the policy will also be
of EUDR, exploring a possible proposal reviewed by the end of June 2028 and
on the Regulation’s extension to other then every five years to identify any
commodities and derived products. issues or potential improvements.

FOCUS POINT
EUTR TIMELINE FOLLOWING THE ADVENT OF EUDR

The EU Timber Regulation (EUTR), precursor of continue adhering to EUTR requirements until
the EUDR, came into force 11 years ago on 3rd 31st December 2028, after which the EUDR will
March 2013 and will be generally repealed by apply. If such products are made from wood that
EUDR from 31st December 2028. was harvested after 29th June 2023, EUTR will
apply only until 30th December 2025, then EUDR
In the case of timber and timber products will apply.
affected by both EUTR and EUDR, the Regulation
makes a distinction based on the time of harvest. In addition, wood products that were not affected
by EUTR but will be affected by EUDR - following
If the products are made from wood that was the extension of the Regulation on a larger range
harvested before 29th Jun 2023 and will enter of timber products - must adhere to EUDR from
the EU market before 31st Dec 2028, they can 30th December 2025, without exceptions.
dece

Placing on the market EUTR EUDR

XXX Applying Regulation

EUTR EUDR

3rd March 2013 29th June 2023 30th December 2025 31st December 2028
EUTR comes into EUDR comes into EUDR starts applying EUDR repeals EUTR
force force to large & medium
companies
Wood Wood
harvested harvested
BEFORE AFTER

7 29th June 2023 29th June 2023

EUDR Products
What are the products affected by EUDR?

The EU Deforestation-free Regulation They are referred to in the official

was designed based on an extensive EUDR text as “relevant commodities”
literature review about the impact of and “relevant products”. The relevant
EU-linked production and consumption commodities are oil palm, soya, wood,
of agricultural and forestry commodities cocoa, coffee, cattle and rubber. The
on global deforestation and forest table shows them together with the
degradation. percentage of their impact on EU-
caused deforestation and forest
An efficiency analysis was conducted degradation.
on a paper, written by Pendrill and
other scholars and published in 2020, The relevant products are the goods
that examined the deforestation risk that are fed with or produced from the
connected to 163 commodities in 135 raw materials subject to EUDR. Possible
countries in the tropics, from 2005 to combinations of relevant commodities
2017. The examination led to the and products include cocoa beans and
targeting of a list of seven commodities chocolate, cattle and leather, palm oil
and some of the derived products. and glycerol, or wood and paper.

EUDR Products.
IMPACT OF COMMODITIES

The percentage represents Oil Palm: 34% Soya: 32.8% Wood: 8.6% Cocoa: 7.5%
the impact on EU-caused
deforestation and forest
degradation of each relevant
commodity.

Coffee: 7% Cattle: 5% Rubber: 3.4% 8

As not all derived products are covered would have been disposed of as waste
by the Regulation, it is important to and are therefore 100% recycled.
check the tariff classification of the
products to determine whether they fall If the goods instead consist of 80%
under the EUDR. The full list can be repurposed waste and 20% raw
found in Annex I of EUDR. materials, they are subject to the due
diligence obligation for the 20% raw
An important clarification relates to materials, but the manufacturer should
goods made entirely from material that also prove with formal documents, e.g.
has completed its life cycle. The certifications or similar, that the
Regulation does not apply to goods that remaining 80% consists of repurposed
are made entirely from materials that waste.
would

9
EUDR Market Players
Who are the market players affected by EUDR?

Under the EUDR, the scope of affected This applies whether the trade is made
actors has also been increased and it through traditional means or via online
can be challenging to understand which platforms, from the moment a product
role an organisation plays in the EUDR enters the market to the moment it is
context, as with new laws come new delivered to the final consumers. In this
mysteries. regard, also retailers fall under the
influence of this Regulation, although
EUDR applies to all companies that not explicitly mentioned.
import to, place on, make available on
or export from the EU market specific The Regulation distinguishes between
commodities - namely coffee, cocoa, two main categories of market players,
rubber, cattle, wood, palm oil and soy “operators” and “traders”. Let’s see who
along with their derivatives, regardless they are and what these actors need to
of the material’s EU or non-EU origins. do to be compliant with EUDR.

10
 Examples
Who are the operators? Company A, B and C are operators.

The definition of “operator” in the official

Company A, based in the
EUDR text is as follows. EU, imports cocoa butter.

“Any natural or legal person who, in the A

course of a commercial activity, places
relevant products on the market or exports
them”, where “placing on the market”
means “the first making available of a
relevant commodity or relevant product on
the [European] Union market”.
Company B, based in EU,
The EU FAQs document states that any uses the cocoa butter to
produce and sell chocolate.
natural or legal person “which places a
relevant product or commodity on the
market for selling (with or without
transformation) or as a gift, for processing
or distribution to commercial or non- B
commercial consumers, or use in the
context of its commercial activities will be
subject to the due diligence requirements
and present the due diligence statement”.
Company C, based in EU,
buys the chocolate and sells
A helpful rule of thumb you can use is that if it outside EU.

a product has not been subject to due

diligence in any earlier step of the supply
chain, then the company that sells to either
commercial or non-commercial entities is C
considered an operator and therefore has to
provide a due diligence statement.

11
All things considered, we could define imports cocoa butter, EUDR would
operators as importers, exporters and consider only company A as operator.
primary producers based in Europe. For
example, an operator is a company that In addition, if company B, also based in
imports cocoa butter to be sold to other the EU, uses company A’s cocoa butter
enterprises or to final consumers in EU. to produce chocolate and places it on
the market, company B has created a
However, the definition of operators new product, with a new HS code
also refers to enterprises that transform subject to EUDR, that is commercialised
one relevant product or commodity into for the first time. Therefore company B
another relevant product and place will also be considered an operator.
them for the first time in the market.
Finally, also company C, based in EU,
As an example, if a company X, based in which buys chocolate from company B
Brazil, exports cocoa butter to the EU and exports it outside Europe qualifies
and company A, based in the EU, as an operator (Article 7).
imports

Summary.
WHO ARE THE OPERATORS?

Importers of relevant commodities and Transformers of products from one in-

EU products into the European market. scope HS code to another and placing
them on the European market.

Exporters of relevant commodities and Primary EU producers placing the

EU products from the European market. EU products within the European market.

12
 Examples
Who are the traders? Company D, E, F and G are traders.

The definition of “trader” in the official

Company D, based in EU,
EUDR text is as follows. buys chocolate from
Company C and sells it to
“Any [natural or legal] person in the supply Company E, F and G.

chain other than the operator who, in the

course of a commercial activity, makes D
relevant products available on the market”,
where “making available on the market” G
means “any supply of a relevant product for E F
distribution, consumption or use on the
[European] Union market [...], whether in
return for payment or free of charge”.
Company E, F and G are
retailers and sell the
This definition gives already an important chocolate to final consumers.
suggestion on how to identify traders by
providing a new, straightforward rule of
thumb: traders are supply chain players that
cannot be considered operators. Going back
to the example about the cocoa companies,
we can state that a company D that buys the
chocolate from operator B based in the EU
and, without transforming it, distributes it to
supermarket chains is considered a trader.

Summary.
WHO ARE THE TRADERS?

Dealers and distributors that do not import, export or transform

relevant commodities or products, but are involved in their trade and
distribution in the European market, including retailers.
13
EUDR Requirements
What must EUDR actors do?

SUPPLIERS’ POINT OF
The EU Deforestation-free Regulation
VIEW
has brought several complications to
global trade, which is already by itself a The EUDR official text has been written with
vast and intricate web connecting operators and traders in mind. As operators
and traders have not enough knowledge nor
economies and cultures around the
reach to comply with EUDR alone, upstream
world. suppliers need to be involved, but EUDR
does not explicitly state what is required
Its introduction will imply additional from them.

administrative and operational These focus sections are dedicated to

activities that will need to be sustained comprehensively express the repercussions
by the global supply chains and in its of the Regulation on suppliers in producing
countries. The intent is to bring more clarity
aftermath will generate related costs,
and information to these overlooked actors
expected to be covered by decreasing by explaining the potential activities other
margins or increasing consumer prices. supply chain actors might demand them.

14
EUDR sets out clear obligations for
operators and traders (Article 3): FOCUS POINT
WHAT IS THE “RELEVANT LEGISLATION”?
1. Deforestation-free: The production of
goods must not have caused EUDR defines the “relevant legislation of
deforestation or forest degradation after the country of production” as the set of laws
pertinent to the country where the goods
30th Dec 2020, regardless of whether are produced. As quoted from the official
the deforestation or forest degradation text, the scope of interest is as follows:
was legal according to the applicable
land use rights,
legislation in the country of production
environmental protection,
forest-related rules, including forest
2. Legally produced: The goods are management & biodiversity conservation
produced in accordance with the if directly related to wood harvesting,
third parties’ rights,
relevant legislation of the country
labour rights and human rights protected
where the production took place. under international law,
the principle of free, prior and informed
3. Due Diligence: The goods are covered consent (FPIC), including as set out in
the UN Declaration on the Rights of
by a due diligence statement, based on a Indigenous Peoples,
due diligence risk assessment, to be tax, anti-corruption, trade and customs
shared with authorities prior to the Regulations.
shipment of the concerned goods to the
This means that while the name of the
European market. Regulation implies a focus on deforestation
only, it should be stressed that not only does
The submission of a due diligence statement, it address forest degradation, but also that
which stems from a due diligence risk legal production in the country of origin,
legal trade and compliance with social and
assessment, makes indispensable to prove
human rights requirements, including anti-
compliance with the first and the second corruption laws and respect of indigenous
requirements. communities, are also in the scope of EUDR.

15
 It is also an important reminder that SUPPLIERS’ POINT OF VIEW
the companies must not import to, WHAT DO DEFORESTATION AND FOREST
DEGRADATION MEAN?
export from, place or make available
in the EU market the concerned According to EUDR official text, the term
goods if (Article 4): “deforestation” refers to the conversion of the
forested land to agricultural fields caused by human
activities.
1. The goods do not comply with the
legislation (e.g. they caused In addition, “forest degradation” is mainly linked to
deforestation or their production timber production and consists of fundamental
was managed in defiance to the changes to the forested land, either through the
conversion of primary forests or naturally
legal framework).
regenerating forests into plantation forests or other
wooded land, or through the conversion of primary
2. The due diligence statement forests into planted forests.
indicates absent or negligible risk
Producers that converted their land after 30th
related to the goods. December 2020 into agricultural fields, planted
forests or plantation forests are considered to have
3. The company did not submit a due caused deforestation and forest degradation. It
follows that relevant commodities cultivated in such
diligence statement reporting all
land plots are not compliant with EUDR and
necessary information prior to the therefore cannot enter the European market.
placing on the market.
16
Who must exercise due diligence?
Obligations vary depending on the size On the other side, SME traders can
of operators and traders. EUDR benefit from a less complicated
provides that operators of any size and compliance process, demanding them
non-SME traders bear the responsibility only to provide the reference number
to assess the risk in their supply chains of the due diligence statement, to store
to ensure that the relevant commodities the relevant information and to pass it
are not linked to illegal practices, on to the operators or the competent
deforestation, or forest degradation. authorities upon request.

The Regulation expects these actors to Operators should report the reference
accomplish it by collecting a necessary numbers in the custom declarations for
set of information, carrying out a risk custom authorities to check before
assessment, and eventually filing a due products are allowed to circulate freely
diligence statement. in the market or to be exported.

Large vs. small & medium companies.

HOW TO DIFFERENTIATE THEM?

Article 3 of Directive 2013/34/EU was amended by Commission Delegated Directive (EU) 2023/2775
and provides the definitions of micro, small, or medium enterprises. At least two of the three thresholds
per category must be met to qualify for the respective type of organisation.

Small Medium
Microenterprises
enterprises enterprises

Balance sheet total < € 450,000 < € 5,000,000 < € 25,000,000

Net turnover < € 900,000 < € 10,000,000 < € 50,000,000

Average n. of
=< 10 pp =< 50 pp =< 250 pp
employees

17
When a company is both Examples
Company H is an operator in the first
operator and trader case and a trader in the second case.
Company H, based in EU,
Given the complexity of today’s global imports coffee beans from
outside the EU and sells them.
supply chains, black-and-white situations are
not the norm. In particular, it can often occur
H
that a company might be the operator for
some commodities and the trader for others.
Scenarios like this can be frequent because
most commodities affected by EUDR are
managed over fragmented and dynamic
supply chains.
Company H also buys and sells
roasted coffee beans from an EU-
Imagine, for example, a coffee company that based roaster, Company J.
is importing and selling beans from outside
the EU but is also buying and selling roasted
beans from an EU-based roaster. Based on
the first commercial activity, this company H
would be considered an operator, but based
J
on the second commercial activity, it
qualifies also as a trader.

SUPPLIERS’ POINT OF VIEW

HOW ARE UPSTREAM SUPPLIERS IMPACTED?

Although EUDR mostly impact operators and to the required information. If they did not make
traders in EU countries, the Regulation affects the efforts towards transparency over the years,
entire supply chain. On one hand, companies putting in place a system that enabled them to
subject to EUDR must produce a due diligence control and monitor the entire supply chain, they
statement, based on a due diligence system, and are unlikely to accomplish due diligence on their
share it with authorities upon request. On the own. This is where the upstream suppliers and
other hand, companies do not have direct access producers come in help.
xx
18
4
What does it mean to exercise due diligence?
EUDR (Article 8) describes three main These three pillars of EUDR are:
actions that operators and non-SME 1. Data Collection,
traders must complete to carry out the 2. Risk Assessement,
necessary due diligence. 3. Risk Mitigation.

Three steps of Due Diligence.

NEGLIGIBLE VS. NON-NEGLIGIBLE RISK

The three steps of due diligence are data collection, risk assessment and risk mitigation. In particular the
risk assessment can result in non-negligible risk as opposed to no risk being present or negligible risk. In
the first case, the company must mitigate the risks identified before placing the assessed goods on the
market; in the second and third cases, the goods are compliant with EUDR and can be marketed.

DATA COLLECTION RISK ASSESSMENT RISK MITIGATION

Information gathering on the Evaluating the data collected to Implementing coherent

supply chain of your products, assess the risk that your measures to bring non-
including data on the products are associated with negligible risks to negligible or
geographical location and the deforestation, forest no risk, such as conducting
period of primary agricultural or degradation or illegality, surveys, laboratory analyses,
forestry production. including human rights. field audits, suppliers’ training.

19
THE DUE DILIGENCE STEPS

Data Collection
Article 9 of the EUDR official text Theoretically, the necessary data can be
describes the information that must be gathered through existing systems and
gathered and made accessible to compiled manually. However, managing
competent authorities upon request to the entire process - like coordinating
meet due diligence obligations. The multiple suppliers, aggregating different
collected information must be stored information types, ensuring that the
for 5 years in internal systems to share data is complete and reliable, and
it when needed and allow future audits. organising it to facilitate the next
phases - requires an incredible amount
The section in the next page provides a of time and energy that can be
detailed overview of the types of data drastically reduced through the
mandated by the Regulation. assistance of a digital platform.

20
Data Collection.
FULL LIST OF REQUIRED INFORMATION

The quantity of products, which should be

The product description, including trade name,
expressed in kilograms of net mass, with
product type, and, for wood-based products,
supplementary units as specified in Annex I to
both common and scientific names of the wood
Council Regulation (EEC) No 2658/87, against
species used. It should also list all relevant
the determined HS code. For all other cases,
commodities or products contained or used in
quantity can be expressed in net mass, volume
their production.
or number of items.

Country of production and relevant parts Contact details of all suppliers, including name,
concerned. postal address, and email address.

Geolocation data of all production plots for the Details of recipients, including name, postal
commodities used in the product, along with address, and email address.
production dates or time ranges. If a relevant
product contains relevant commodities sourced Assurance that the products are deforestation-
from different plots of land, all land plots free and legally produced, backed up by
concerned must be included in the due conclusive and verifiable evidence.
diligence. Deforestation or forest degradation
on any plot automatically disqualifies related
Evidence of compliance with relevant legislation
commodities/ products. For cattle-related
in the country of production, including rights to
products, geolocation data should include all
land use, is required for all relevant
places where the cattle has been held.
commodities.

21
SUPPLIERS’ POINT OF VIEW
WHAT ROLE DO UPSTREAM SUPPLIERS PLAY IN
DATA COLLECTION?

The information required by EUDR is quite

straightforward, but it can still become demanding if the
level of fragmentation and dynamism of the supply
chain is elevated.

For instance, companies in the coffee industries

usually source the coffee beans from producing
countries and then roast them in EU, creating brand-
specific blends. A big coffee company can easily expect
around 2,500 shipments per year of coffee beans,
sourced from thousands of producers, all coordinated
by more than one ‘collector’.

Of course, not every producer will contribute to every

shipment, but this certainly gives an idea on the degree
of complexity operators and traders have to deal with.

The collection of such information implies deep

collaboration from the producer side. The same applies
with data regarding the evidence that products are
deforestation-free and legally compliant. In this case,
proof is gathered normally through legal permits – in
the case of the wood sector they could consist in
harvest permits, logging permits, or timber extraction
permits.

On top of that, producers must provide also land use

and ownership rights, proof of product taxes and
additional licenses, as well as exemptions based on the
forestry legislations of the country of production. In
addition, EUDR aims to prevent the mistreatment of
indigenous communities still living in the natural areas
and requires additional documentation concerning their
social welfare.

22
SUPPLIERS’ POINT OF VIEW
GEOLOCATION DATA

Another aspect that might require significant by a radio chip that allows them to receive signals
effort is the collection of geolocation data. from satellite navigation systems and determine
Geolocation data refers to information that their location.
identifies the geographical location of the land
plots. It must be provided in a shapefile or as The second way takes advantage of GIS
point coordinates for plots smaller than 4ha, and (Geographic Information System) applications,
can be collected through various means, including which are software programs that enable users to
GPS (Global Positioning System). capture, store, analyse, manage, and present
spatial or geographic data. These applications
There are mainly two ways to collect geolocation allow users to draw polygons directly on the map
data , i.e. on the land plots. The first one consists shown in the user interface. Most common GIS
of using mobile apps or professional GPS devices. applications are ESRI, Google Maps, Google Earth
Both work similarly and use location data supplied and geoJSON.io.

23
Risk Assessment
What is now to be done with all the On top of that, they must consider
data collected? Once the information is several factors, including suppliers’
collected, there must be an IT system in preparedness to adapt their processes
place or a designated person that to EUDR, their proactiveness, as well as
makes sense of all the data. The next the inevitable language barriers.
phase consists in fact of assessing the
risk of non-compliance connected to Again, the qualified assistance from
the concerned products by examining expert traceability professionals is
the documents collected. beneficial to avoid inefficiencies, bad
headaches and non-compliance.
Companies must carry out risk
assessments at least once per year and Risk assessment involves an in-depth
be able to illustrate the data collection understanding of the Regulation itself,
process, and how the level of risk was but also an deep understanding of the
determined based on the relevant documentation provided and the
information and documents. bureaucracy surrounding global primary
production and trade. The uncertainty
The result must be either that no or about what and how to verify the data
negligible risk exists, or that non- can expose businesses to the risk of
negligible risk has been detected. compliance failure.

24
Risk Assessment.
FULL LIST OF PRINCIPLES

According to EUDR, the risk assessments must be based on the full list of principles displayed below.

The risk assigned to the country of production Assessment of deforestation or forest

or its parts (Article 29). degradation prevalence within the country of
production or its parts.

Evaluation of valid claims by indigenous

Identification of forests within the country of
peoples, supported by objective and verifiable
production or its parts.
evidence, regarding land use or ownership
where relevant commodities are produced.
Presence of indigenous peoples within the
country of production or its parts.
Genuine consultation and cooperation with
indigenous peoples within the country of
Consideration of concerns regarding the
production or its parts, e.g. FPIC framework.
country of production and origin, such as
corruption levels, document falsification, law
Evaluation of supply chain complexity and enforcement issues, human rights violations,
product processing stages, especially challenges armed conflict, or the presence of UN Security
in tracing products to specific production plots. Council or EU Council sanctions.

Consideration of conclusions from Commission

Analysis of risks related to Regulation
expert group meetings supporting Regulation
circumvention or mixing with products of
implementation, available in the Commission's
unknown origin or from deforested areas.
expert group register.

Supplementary data on Regulation compliance, Assessment of the reliability, validity, and

potentially sourced from certified or third-party sources of information gathered during the first
verified schemes, including voluntary schemes step of data collection, in accordance with
recognised by the Commission under Article Article 9 (1), along with their interlinkages.
30(5) of Directive (EU) 2018/2001, provided
they adhere to Article 9 criteria.
Examination of substantiated concerns under
Article 31 and records of non-compliance by
Assessment of any information indicating non- operators or traders in the supply chain with
compliance risks with relevant products. Regulation requirements.

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Risk Mitigation
Risk mitigation measures must apply in
cases where the risk assessment resulted in
a non-negligible risk and are recommended
in case of negligible risk.

When no risk or negligible risk is found,

companies are free to import to, export
from, place to or make available in the EU
market the concerned products.

According to Article 11, initiatives that

qualify as risk mitigation interventions
include obtaining further information,
organising independent surveys, laboratory
analyses, on-site audits, suppliers’ training,
and supply chain modifications, for instance
by choosing different suppliers or through
capacity building and investments.

Companies must also set up a structured

risk mitigation system, comprising policies
and control procedures, and be scrutinised
by independent audit functions.

SUPPLIERS’ POINT OF VIEW

WHAT ROLE DO UPSTREAM SUPPLIERS PLAY IN RISK ASSESSMENT?

It can occur that documents are lacking clarity, The higher is the quality of data provided, the
accuracy, and coherence. It is at this point that more efficient and detailed is the risk assessment.
suppliers are contacted for further clarification Collaboration is once again key to save time
and for submitting additional information. and effort for all stakeholders involved.
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Likewise, the risk assessment procedures
and the risk mitigation measures must be
reviewed at least once per year. In addition,
companies must be able to prove the
rationale of the basis of the decisions
making process regarding the risk mitigation
initiatives.

In case of non-SME operators, it is also

required to appoint a compliance officer at
management level.

It can all feel overwhelming, but with the

right processes in place and the right partner
by your side, risk mitigation requirements
can be streamlined and integrated into the
current business operations with little effort
or expenditures.

SUPPLIERS’ POINT OF VIEW

WHICH ROLE UPSTREAM SUPPLIERS PLAY IN RISK MITIGATION?

Suppliers should try to anticipate EUDR For instance, palm oil is already the most
implementation and start working to ensure that productive crop among the vegetable oils, offering
their production does not generate deforestation greater yields for lower cost of production.
or forest degradation.
By applying best practices of sustainable planting
This could imply a production shift towards more divulged by non-profit organisations such as the
sustainable practices, improving efficiency and Roundtable on Sustainable Palm Oil (RSPO),
productivity without the need to clear more land producers can advance their plantation
to satisfy growing demand. management practices and increase the
performance of the plantings, while helping
Smallholders can see a real opportunity protect the environment and accessing a better
to get ahead of competitors. income and livelihood.
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What to do after due diligence?
Companies carrying out due diligence, Please keep in mind that some but not
i.e. the three-step process explained all information required in the due
above, are required to make available a diligence system must be included in
due diligence statement to authorities. the due diligence statement. The full
The due diligence statement is a purely list is present in Annex II.
administrative document that must be
submitted through the EU information Once the due diligence statement is
system by operators, non-SME traders ready, it must be exported in a
or their authorised representatives. standard format and uploaded to the
EU information system to be shared
In general, a due diligence statement with authorities.
must encompass the aspects described
in Annex II of EUDR official text, along
with a confirmation that due diligence The due diligence statement is not
has been exercised and no risks or only sufficient by itself to be EUDR
negligible risks have been identified. compliant, but it must be based on
a due diligence risk assessment
that demonstrates negligible or no
risk of deforestation and illegality
for the relevant product or
commodity.

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The Due Diligence Statement.
WHAT TO INCLUDE IN EVERY DUE DILIGENCE STATEMENT AS LISTED IN ANNEX II

Operator’s name and address. Information gathered during the data collection:
The description, including HSC and free text,
the trade and scientific (for timber only) names
If applicable, the Economic Operators of the product the company intends to place
Registration and Identification (EORI) number on the market or export.
(see Article 9 of Regulation (EU) No 952/2013). The quantity of products, which should be
expressed in kilograms of net mass, with
supplementary units as specified in Annex I to
The reference number of the existing due Council Regulation (EEC) No 2658/87, against
diligence statement issued by an upstream the determined HS code. For all other cases,
supply chain actor (Article 4, par. 8 and 9). quantity can be expressed in net mass, volume
or number of items.
Country of production and relevant parts
The following statement, quoted directly from
concerned.
the official text: “By submitting this due
Producer name (not stated in Annex II but
diligence statement the operator confirms that
required by the EU Information System).
due diligence in accordance with Regulation
Geolocation data of all production plots for the
(EU) 2023/1115 was carried out and that no or
commodities used in the product, but there is
only a negligible risk was found that the relevant
no need to include production dates or time
products do not comply with Article 3, point (a)
ranges. If a relevant product contains relevant
or (b), of that Regulation.”.
commodities sourced from different plots of
land, all land plots concerned must be included
The following signature format, as stated in the in the due diligence. Deforestation or forest
official text: degradation on any plot automatically
“Signed for and on behalf of: disqualifies related commodities/ products. For
Date: cattle-related products, all places where the
Name and function: Signature” cattle have been held must be declared.

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FOCUS POINT
SIMPLIFIED DUE DILIGENCE

The responsibilities imposed on operators, non-SME

traders, and authorities are contingent upon the risk
assessment of the production country or region,
determined by a benchmarking system administered
by the EU Commission.

This system categorises countries into low, standard,

or high-risk zones based on their likelihood of
producing raw materials or goods that aren't free
from deforestation or fail to adhere to the
production country's legislation.

Consequently, this classification influences the

severity of due diligence obligations, with
requirements being streamlined for products
originating from low-risk regions and tightened for
those from high-risk regions.

Only in the case of low-risk regions and countries,

operators can benefit from simplified due diligence.
This consists of avoiding the risk assessment and risk
mitigation steps if it emerges from the data
collection that the country which the companies are
sourcing from is low-risk.

In particular, operators only need to store

documentation that proves that the risk that EUDR
has been infringed or that the relevant products have
been mixed with goods from standard- or high-risk
countries is negligible.

At the time of writing, it is still unclear whether the

EU benchmarking system will address the
deforestation and all legality requirements of EUDR
or if it will only cover deforestation or parts of the
legality requirements.

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Exceptions related to
operators’ requirements
SME operators benefit from an exception
(Article 4, par. 8), stating that they are not
required to issue a due diligence statement
(DDS) for relevant products or commodities
for which a due diligence statement has
already been submitted to authorities. They
shall only present the DSDS reference
number upon request of authorities.

There exists a second exception that is

worth mentioning. To avoid double due
diligence, EUDR declares that non-SME
operators further down the supply chain,
meaning those companies that are not
importers or exporters but ‘transformers’ of
relevant products and commodities, can use
the due diligence carried out earlier in the
supply chain by other operators and submit
the relevant reference number for the parts
of their relevant products that were already
subject to due diligence.

In both cases, not only do companies remain

obliged to ascertain that due diligence was
performed, but it is of the utmost
importance that they are also able to track
this data and easily retrieve it when needed.

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What must SME traders do?
The burden of EUDR compliance lies operators and traders who supplied the
mostly on the shoulders of the concerned goods to them or to whom
operators and non-SME traders, but they supplied the concerned goods,
SME traders are still bound to specific alongside the reference number of
EUDR requirements, however less related due diligence statements.
complicated.
They are not required to submit due
In particular, they must collect the diligence statements or to report on
name, trade name or trade-mark, their due diligence systems, but they
physical address, email address and, have to store all documentation related
when applicable, the website of all to EUDR compliance for 5 years.
operators

FOCUS POINT
WHO ARE THE AUTHORISED REPRESENTATIVES?

The authorised representatives are organisations Also in this case, simplification applies for micro-
that receive from the operators and traders the enterprises or natural persons part of the supply
mandate to act on their behalf and submit the due chain. They can in fact delegate the closest
diligence statement in the EU information system. downstream operator or trader to act as
They can provide a copy of the mandate upon authorised representative. However, the
request from the authorities in one of the official responsibility of proving that the relevant
languages of the European Union and in the products are compliant with EUDR still lies on the
official language of the member state. micro-enterprise or natural person.

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Setting up & maintaining due diligence systems
Following the constraints imposed by Non-SME companies are required to
EUDR, all companies that must comply publicly report on their due diligence
with the new Regulation must put in systems, comprising also the actions
place a structured due diligence system taken to fulfil the obligations outlined in
to exercise due diligence. The system Article 8.
must be reviewed at least once per year
and updated based on necessary To avoid double reporting, if these
improvements. These updates, along companies are already subject to other
with all the documentation collected EU or national legislations addressing
through or related to the due diligence human or environmental rights, they
system must be stored for a minimum of can integrate the necessary documents
five years and shared with authorities for EUDR compliance as part of their
when demanded. reporting for those legislations.

The Due Diligence System.

EUDR REPORTING

The EUDR reporting must include the following information:

A summary of the data gathered during the

The result of the conducted risk assessment and
initial data collection process, including a
the undertaken risk mitigation measures, as well
description of the consultation process with the
as the documentation of the criteria used to
local indigenous or civil communities in the
evaluate the level of risk.
country of production, where applicable.

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FOCUS POINT EU Information System
THE EU INFORMATION SYSTEM
functionalities
Collaboration is defined as a key factor in EUDR
Registration of operators, traders
success. To facilitate the activities of competent
and their authorised representatives.
authorities, they need to access significant information
about operators and traders, communicate with custom
Registration and storage of available
authorities, and receive guidance and support from the
due diligence statements (DDS).
European Commission.
Communication to the concerned
How to accomplish it all? Through the EU Information company of one reference number
System, the underlying platform keeping all per due diligence statement.
stakeholders connected and which will be available
from December 2024. Conversion of geolocation data from
due diligence systems.
The EU Information System will be accessible by all
actors involved in EUDR compliance with the objective Registration of the results of checks
to streamline the whole auditing procedure. from authorities on compliance.

In particular, the system will be used to select the Integration with the EU Single
operators and traders to be audited, allowing for Window Environment for Customs
cooperation among investigative bodies and to allow collaboration between
optimisation of checks. customs and competent authorities.

Collection of information relating to

After the EU Information System will be integrated with
the annual plans of the checks, their
an electronic interface based on the European Union
outcomes, and the risk criteria
Single Window Environment, expected to be developed
determined by the competent
by the end of June 2028, the whole EUDR compliance
authorities, aiming to select the list
process will acquire a direct link with the customs data
of companies and products subject
and authorities, fostering collaboration also with those
to the Regulation to be checked.
jurisdictions.
Promotion of information sharing for
assistance and collaboration among
competent authorities, custom
authorities and the EU Commission.

Promotion of cooperation among

competent authorities, operators,
traders and custom authorities.

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Competent Authorities’ Checks
What kind of audits are EUDR actor subject to?

Competent authorities are institutions related to the specific product or

nominated by the European Union commodity that the operator is placing
member states to oversee the correct or exporting in the European market.
implementation of EUDR compliance
guidelines inside the territory of their Normally, the checks would be
respective countries through planned restricted to what is discussed in the
checks, which must be stored for 10 previous paragraph. However, in case
years. These are different for operators some doubts emerge during the checks,
and non-SME traders on one side, and the competent authorities might decide
SME traders on the other side. to inspect the products and
commodities to ensure they correspond
The checks on operators and non-SME to what is declared in the due diligence
traders must be carried out on the due statements, technical and scientific
diligence system that the companies verifications on land plots and
decided to use, especially the risk deforestation-free claims.
assessment and risk mitigation
processes, as well as the documents The checks on SME traders are limited
and records illustrating how the due to the information related to the
diligence system works. In addition, relevant products that they are
they should examine risk mitigation supposed to collect based on EUDR
measures and due diligence statements requirements.

35
Checks From Authorities.
RISK CRITERIA FOR THE CHECKS

The checks are defined by competent authorities based on risk criteria, which should be determined
through an analysis of aspects that can favour or are linked to non-compliance with EUDR. Some
examples of these aspects are:

Location of land
Presence of Previous EUDR
Final product is a plots, in Risk classification
dynamic and penalties on an
combination of particular, their of countries of
fragmented examined
relevant products proximity to production
supply chains company
forests

The EU Commission is expected to The Regulation stresses in several

periodically validate the European- paragraphs the need for a collaborative
based risk criteria, while the competent approach among investigative bodies of
authorities must include the established different member states, for instance by
national risk criteria in an annual plan, asking them to share reciprocally their
along with a systematic addition of plans and knowledge to coordinate joint
suggested risk criteria for high-risk efforts. This is especially important
countries and parts thereof. when the examined company is an
operator stretching its business across
The annual plan should also contain the more than one EU country.
list of operators and traders that the
authorities will check throughout the Cross-state collaboration should also
year, and for each of them potentially concern the data about EUDR actors,
also the specific due diligence their due diligence statements, and the
statements to be verified. description and outcome of the checks,
which must all be uploaded to the EU
These plans should be updated taking Information System. Competent
into account the acquired experience authorities are also expected to
and the related outcomes, with the cooperate with jurisdictions in third
aim of increasing their effectiveness countries, for example if there is a
year by year. necessity to conduct field audits.
36
FOCUS POINT
RELEVANT PRODUCTS REQUIRING IMMEDIATE ACTION

Emergencies happen! What if there is a very high products from entering the EU market, or require
risk that the examined products are not compliant customs authorities to intervene to stop their
with EUDR? In that case, competent authorities transit for three days every time. The expected
must identify such situations as soon as possible collaboration between customs authorities and
and register them into the EU information system, competent authorities is laid out in Articles 26
after which they need to act promptly to stop the and 27 of the official text.
p

Reporting on EUDR enforcement.

TOPICS TO COVER

EUDR also demands the various member states to

report on the enforcement results and achievements
of the Regulation before 30th April of every year. The
reporting should verge on:

The scheduled checks and the risk criteria that

determined the checks.

The quantity of products examined compared to the

total quantity of products subject to the Regulation
and the countries of production, and communicated
in units of measures as described in Article 22,
paragraph 1 (c) of the official text.

The outcomes and pertinent quantitative

information of the checks with comparisons to the
total number of companies subject to the Regulation,
including the percentage of checks that required a
warning of the examined companies, with their
justification.

The description of the authorities’ disciplinary

actions carried out regarding non-compliant
companies and products.

37
What happens if the competent authorities find
you non-compliant?
Once the authorities determine a following the principles of effective,
company is violating the EUDR proportionate and dissuasive sanctions.
requirements, they have two actions to
perform. The first one is applying the The second one is requiring a
penalties depending on the local remediation of the non-compliance
Regulations outlined by each country status of the examined products within
where the infringement took place. a period of time that must be
Concerning the penalties, each member acceptable and indicated in the national
state is obliged to lay down rules, legislation.
following

Penalties.
WHAT ARE THE PENALTIES?

Maximum fees of at
Reputational Confiscation of goods and
least 4% of total annual
Damage revenue concerned
revenues

Exclusion from public Exclusion from the Prohibition of the use

procurement European markets of of simplified due
processes/financing goods concerned diligence

38
EUDR mandates also that each member state
shall ensure to examine a minimum number of
companies, based on the country where the
products are produced. If the country of
production is classified as low-risk, at least 1%
of the total companies subject to the Regulation
must be checked. For countries classified as
standard-risk, this percentage increases to 3%,
and for high-risk countries, not only does the
percentage reach 9%, but authorities must also
check 9% of the quantity of each of the relevant
products.

These targets should be achieved individually

for each type of commodity, meaning that the
targets for each commodity must be met
independently from the targets for other
commodities.

The Regulation reports explicitly that the

competent authorities cannot give notice to the
companies of the imminent checks to avoid the
alteration of their practices, unless the warning
is necessary to conduct the check.

During their checks, competent authorities incur

certain costs, not only related to the
investigative activities, but also to the storage
and management of confiscated non-compliant
products. When companies are found guilty of
non-compliance, they can be requested to
xxxxxx sustain the costs, if allowed by the
national legislation.
39
The details on the liable company and On the other side, the remediating
the penalty incurred will be notified actions to be carried out by the liable
according to current privacy laws to the company comprise the list on the right.
European Commission, which will If the remediation does not take place
publish the list of convicted companies within the agreed period of time,
on its website with the necessary competent authorities must intervene
information to understand the to forcefully ensure that the
circumstances of the infringement and disciplinary actions are implemented on
the sanctions. the company side.

Remediation actions.
WHAT TO DO AFTER EUDR AUDIT FAILURE

The amendments to the formal Any update on the due diligence system aiming to avoid
process that impeded compliance future non-compliance situations.
with EUDR, e.g. collection of
missing information,analysis of the The withholding of non-compliant products from entering
reasons behind the lack of the market or their immediate recall from the market.
necessary information, and
investigation on whether the risk of The donation of the products to no-profit institutions or,
non-compliance can occur again. when it is not possible, organising their disposal as waste.

40