International trade is undergoing significant changes in response to a growing concern for sustainability and the preservation of global ecosystems. In this context, the EUDR (European Union Deforestation Regulation) is a key EU-driven measure to combat imported deforestation and promote more responsible and sustainable trade practices.
The EUDR Regulation establishes strict criteria for the import and export of products associated with deforestation, requiring companies to prove that their raw materials do not come from areas affected by illegal logging or forest degradation.
This regulation affects a variety of industries and forces companies to re-evaluate their supply chains to comply with traceability and due diligence requirements.
For companies seeking to operate in the European market, understanding and complying with the EUDR is critical to avoid penalties and ensure continuity of operations.
Throughout this article, we will explore what the EUDR Regulation is, its rationale, affected products and the steps necessary to ensure compliance.
What is the EUDR Regulation?
The EUDR (European Union Deforestation Regulation) is a regulation adopted by the European Union with the aim of curbing global deforestation caused by the demand for certain products.
This regulation focuses on what is known as imported deforestation, i.e. deforestation that occurs in other countries to satisfy the consumption of products in the European market.
The EUDR prohibits the import of products and raw materials associated with illegal logging or coming from areas where deforestation has occurred after a specific deadline.
The regulation covers a number of products with a high environmental impact, including timber, soybeans, palm oil, coffee, cocoa and some derivatives. With this measure, the EU seeks not only to protect forest ecosystems, but also to promote responsible trade practices that respect environmental balance and contribute to Europe’s sustainability commitments.
In addition, the EUDR imposes specific requirements on companies, such as the need to establish traceability systems and carry out thorough due diligence in their supply chains.
Thus, companies wishing to operate in the EU must ensure that their products comply with sustainability regulations and do not originate from areas affected by deforestation. This regulation represents a major shift in international trade, requiring companies around the world to align themselves with the EU’s sustainability standards, promoting more ethical and environmentally conscious trade.
Purpose of the EUDR Regulation
The main purpose of the EUDR is to protect forests and reduce global deforestation indirectly caused by the demand for products in the European Union.
By establishing stringent criteria for the import of forest and agricultural products, the EUDR aims to reduce imported deforestation and ensure that products entering the European market do not contribute to the degradation of ecosystems.
In addition to its environmental objective, the regulation also promotes transparency and accountability in supply chains. Importing companies must adopt traceability systems that allow them to know the origin of their raw materials and confirm that they do not come from deforested or illegally degraded areas. This allows for greater transparency in international trade, aligning the EU with its climate commitments and sustainability goals.
The EUDR also aims to inspire change in exporting countries, encouraging producers to adopt sustainable practices and implement environmental protection measures. By requiring companies to demonstrate that their products are deforestation-free, the EU creates an environment where sustainability becomes an added value for exports.
Basics of the EUDR Regulation
The EUDR Regulation is based on several fundamental principles that seek to curb global deforestation and protect ecosystems while promoting responsible business practices. These fundamentals establish the requirements and procedures that companies must comply with to ensure the sustainability of their supply chains.
Imported deforestation
One of the key concepts of the EUDR is the reduction of “imported deforestation“, i.e. deforestation that occurs in other countries due to the demand for products in the European market. The EU, being one of the largest importers of agricultural and forestry products, seeks to take responsibility for its impact on global forests and reduce its environmental footprint through this regulation.
Traceability and due diligence
The EUDR requires companies to implement traceability systems to know the origin of the products they import and ensure that they do not come from illegally deforested areas.
Due diligence is another key requirement, which implies that companies must assess and document the deforestation risks associated with their supply chains. This includes gathering evidence to certify that raw materials comply with sustainability regulations, thus protecting both the environment and the company’s reputation.
Risk assessment and controls
To ensure compliance with the EUDR, companies must conduct a thorough risk assessment of their operations and take mitigation measures where necessary.
This involves, for example, conducting regular audits of suppliers, analyzing the sourcing of raw materials and implementing additional controls in case of suspected deforestation.
This approach to monitoring and risk assessment enables companies to anticipate potential compliance issues and ensure that their products are accepted on the European market.
Protection of biodiversity and human rights
Although the main focus of the EUDR is environmental, the regulation also promotes the protection of biodiversity and the rights of local communities.
By ensuring that products do not come from illegally deforested areas, it prevents the destruction of critical wildlife habitats and protects the communities that depend on these ecosystems.
These foundations of the EUDR Regulation not only set sustainability standards for the European market, but also promote a structural change in global trade, encouraging exporting countries to adopt more sustainable production practices and to preserve their natural resources.
Products and raw materials affected
The EUDR Regulation covers a number of products and raw materials that are considered high risk in terms of environmental impact and deforestation.
These products are subject to strict regulations in the European Union, and companies must ensure that their imports do not contribute to the degradation of forests and ecosystems. The main products and raw materials affected by the EUDR are listed below:
Wood and wood by-products
The timber industry is one of the most closely monitored under the EUDR, as the unregulated exploitation of forests is a direct cause of deforestation.
This includes raw wood, woodworking products, pulp, paper and other derivatives. Companies must provide documentation of the provenance of timber to ensure that it does not come from illegally deforested or degraded areas.
Palm oil
Palm oil is a key commodity in the EUDR due to its high impact on deforestation, especially in tropical regions such as Southeast Asia.
Companies importing palm oil or products containing palm oil must ensure that their supply chain complies with sustainability requirements and that the origin of the palm oil is verified.
Soy
Soybean production is one of the main causes of deforestation in regions such as the Amazon and other tropical forests. Because of its use as animal feed and in food products, soy is under strict scrutiny.
Companies must demonstrate that imported soybeans meet traceability standards and do not come from areas deforested after the deadline set by the regulation.
Coffee and cocoa
Both crops are linked to deforestation in Latin America and Africa, where agricultural expansion has significantly affected local ecosystems.
Coffee and cocoa importers must implement traceability systems to ensure the sustainable origin of these products, thus protecting tropical forests and their natural resources.
Rubber
Although less mentioned, rubber is also included in the list of products affected by the EUDR due to the impact its production can have on tropical forests in Asia and Africa.
This regulation requires rubber importing companies to ensure that their suppliers comply with sustainability regulations.
Livestock and by-products
Extensive cattle ranching, especially in regions such as South America, has been a major factor in deforestation.
The EUDR includes products derived from livestock (such as meat and leather), requiring companies to prove that their suppliers do not contribute to forest destruction.
Each of these products requires traceability systems and specific certifications to validate their provenance and compliance with EUDR regulations. This strict control approach ensures that products entering the European market do not contribute to deforestation and that companies take responsibility for sustainability in their supply chains.
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Requirements and responsibilities for companies
To comply with the EUDR, importing and exporting companies must implement a series of control and traceability measures in their supply chains.
These responsibilities not only ensure compliance with the regulation, but also protect companies from sanctions and contribute to environmental sustainability.
The following are the main requirements and responsibilities that the EUDR imposes on companies:
Traceability and proof of origin
Companies must ensure the traceability of their traceability of their products from origin to arrival on the European market. This means being able to accurately identify where raw materials come from and to demonstrate that they do not come from deforested or illegally degraded areas.
Traceability systems must be robust and supported by documentation that certifies the sustainability of the origin of the products.
Due diligence
The EUDR requires companies to conduct comprehensive due diligence to assess and mitigate deforestation risks in their supply chains. This process includes identifying potential risk areas, verifying that suppliers comply with sustainability standards, and implementing preventive measures if deforestation risks are identified. Due diligence is a fundamental requirement that helps companies document their efforts and protect themselves in case of audits.
Documentation and certification
Companies must submit complete documentation supporting compliance with EUDR requirements.
This documentation may include sustainability certifications, audit reports and raw material sourcing records.
These certifications and records must be up-to-date and available for review at any time. Lack of adequate documentation can lead to penalties and restrictions on access to the European market.
Risk assessment and mitigation measures
In addition to due diligence, companies should conduct a periodic risk assessment to identify potential non-compliance in their supply chain. In the event that deforestation risks are identified, the company should implement mitigation measures, such as additional audits, supplier changes or more stringent control systems.
These actions enable companies to reduce the environmental impact of their operations and comply with the EUDR.
Transparency and communication
The regulation requires companies to maintain clear and transparent communication about their sustainability practices, both internally and with regulators and the public. This transparency not only helps companies comply with the EUDR, but also strengthens their reputation in the marketplace.
Companies should be willing to share information about their traceability and sustainability practices to demonstrate their commitment to environmental protection.
Penalties and consequences of noncompliance
The EUDR establishes sanctions for companies that fail to comply with its requirements, which can include fines, restrictions on access to the European market and even damage to corporate reputation.
Non-compliance can have significant consequences for companies, affecting both their access to the European market and their image with customers and business partners. It is therefore essential that companies make EUDR compliance a priority responsibility and take proactive steps to ensure that their operations are compliant.
Application of the EUDR Regulation: How to comply with its requirements
Complying with the EUDR requires companies to implement a number of specific steps to ensure the traceability and sustainability of their products.
Below are the key steps to meet EUDR requirements and ensure compliance throughout the supply chain.
Step 1: Supply Chain Mapping
The first step is to conduct a thorough mapping of the supply chain to identify all suppliers and locate the exact origin of raw materials. This mapping allows companies to ensure that products do not come from deforested areas or areas at risk of degradation.
In addition, mapping is essential to identify hotspots and areas where additional control measures may need to be implemented.
Step 2: Implementation of traceability systems
Once suppliers have been identified, it is essential to implement a robust traceability system to document the journey of products from their origin to the point of import into the European Union.
This may include the use of technology such as QR codes or digital databases that collect information from each stage of the process. Traceability not only facilitates EUDR compliance, but also provides valuable transparency for customers and regulators.
Step 3: Risk assessment and due diligence
Due diligence is one of the core requirements of the EUDR. This step involves assessing the deforestation risks associated with each supplier and each stage of the supply chain.
Companies must regularly assess their suppliers and analyze the risk of raw materials coming from illegally deforested areas. This includes audits, source data analysis and, if necessary, field verifications.
Step 4: Mitigation measures in case of risk
If potential deforestation or non-compliance issues are identified during the risk assessment , the company should implement mitigation measures.
These measures may include additional audits, modification of commercial agreements with certain suppliers or even changing suppliers. Implementing these measures reduces the risk of non-compliant products entering the European market and protects the company from sanctions.
Step 5: Reporting and documentation
The EUDR requires companies to maintain detailed and up-to-date documentation of the entire compliance process. This includes origin reports, sustainability certifications and traceability audits, among others.
The documentation must be available to regulatory authorities in case of inspection. In addition, it is recommended that companies generate internal reports to continuously assess their compliance with the EUDR and optimize their sustainability processes.
Step 6: Collaboration with logistics partners
Complying with the EUDR can be a logistical and administrative challenge. Collaborating with specialized logistics partners, such as Across Logistics, can simplify the compliance process. A logistics partner with expertise in sustainability and regulatory compliance can offer documentation management services, traceability consulting and risk assessment systems.
This collaboration enables companies to optimize their operations and reduce the risks of non-compliance, facilitating a smooth and safe transition to EUDR standards.
Impact on international trade and logistics
The EUDR Regulation introduces significant changes in international trade, impacting both exporters in producing countries and importers in the European Union. Traceability and sustainability requirements impose new challenges and opportunities in global logistics, forcing companies to review their practices and adapt their operations to comply with environmental requirements.
Reconfiguration of supply chains
EUDR restrictions mainly affect supply chains for products linked to deforestation, such as timber, palm oil, soy and other agricultural products. To comply with the regulation, many companies are forced to reconfigure their supply networks, seeking suppliers that meet sustainability requirements.
This has generated a growing demand for certified raw material sources and suppliers with clear environmental protection policies, encouraging exporting countries to adapt their practices and align with European standards.
Increased operating costs
Implementing traceability systems and conducting audits and risk assessments increases operational costs for companies. Investments in traceability technology, compliance training and sustainability certifications are necessary to maintain EUDR compliance, but can also affect profit margins, especially for small and medium-sized companies.
Despite these costs, EUDR compliance translates into a competitive advantage by securing access to the European market and enhancing a company’s reputation.
Demand for traceability and digitalization technologies
Traceability is an essential requirement of the EUDR, and its implementation has accelerated the adoption of technologies such as satellite monitoring systems and digital databases that allow the origin and route of raw materials to be traced in real time.
The digitization of logistics processes not only facilitates regulatory compliance, but also brings transparency and efficiency to the entire supply chain, improving the responsiveness of companies to regulatory and market demands.
Impact on global competitiveness
The EUDR places companies operating in Europe in a unique position of leadership in sustainability and environmental responsibility. The sustainability standards required by the EUDR are trend-setting and could be adopted by other markets in the future.
This represents a competitive advantage for European companies, as it allows them to align with the expectations of consumers, who increasingly value sustainability and ethics in commerce.
Logistical and international coordination challenges
Complying with the EUDR involves greater logistical complexity, especially for companies operating in emerging markets where traceability and sustainability certifications are not widely implemented. In addition, coordination with suppliers in different regions, international audits and constant updating of origin data represent an operational challenge.
Having specialized logistics partners, such as Across Logistics, can help companies overcome these challenges and ensure that every step of the process complies with EU regulations.
How Across Logistics can help your company comply with the EUDR
Adapting to the requirements of the EUDR Regulation can be a significant challenge for companies operating in the European market, especially in sectors related to high deforestation risk products.
Across Logistics specializes in providing logistics and consulting services that facilitate compliance with the sustainability and traceability regulations required by the European Union, helping companies meet the strict EUDR standards and remain competitive in the global marketplace.
By choosing Across Logistics, companies benefit from a logistics partner committed to sustainability and environmental protection. Our comprehensive approach not only facilitates EUDR compliance, but also enables our customers to reduce the risk of penalties, enhance their reputation in the marketplace and actively contribute to the conservation of global ecosystems.
With Across Logistics, EUDR compliance becomes a competitive advantage and an opportunity to establish a sustainable and responsible supply chain.
