The European Union has adopted a new industry-wide regulation (2023/1115) to reduce deforestation and forest degradation worldwide. The regulation introduces important new obligations to ensure traceability and sustainability of the origin of the products it covers.
EU Deforestation Regulation (EUDR) - What your company needs to know?
The European Union has adopted a new industry-wide regulation (2023/1115) to reducedeforestation and forest degradation worldwide. The regulation introducesimportant new obligations to ensure traceability and sustainability of theorigin of the products it covers.
Who is affected?
Companies that import, export or sell products covered by the regulation (wood, cocoa, coffee,soya, oil palm, rubber, cattle) or their derivatives in the EU.
What should your company do?
Find out whether your products fall within the scope of the Regulation. Make a duediligence statement (DDS) of your products. DDS includes gathering accurateinformation on the origin of the products (including GPS coordinates),assessing the risks of deforestation and illegal activities and, if necessary,taking risk mitigation measures. Finally, submit the DDS to the EU-TRACES system before importing, exporting or selling the products.
When?
The sooner you start preparing, the better. The regulation will apply from 30 December 2025,with a transitional period for micro and small-sized enterprises until 29 June2026.
To whom does the EUDR apply?
At the customs clearance for imports and exports, the obligations are the same for alloperators. In addition, large companies are subject to an annual publicreporting obligation for all products they place on the EU market. Smallercompanies are not subject to the public reporting obligation.
· A large enterprise is a company that exceeds at leasttwo of the following three thresholds at the balance sheet date:
o a balance sheettotal of more than €25,000,000
o a turnover of more than €50,000,000 or
o more than 250 employees.
· Smaller companies have lighter obligations and alonger transitional period.
What companies have to do?
Before placing a product on the market, companies must:
· Find out whether the product is covered by the regulationand if so:
· Make a DD-statement to certify that the products to beplaced on the market are deforestation-free.
For the DD-statement, the company must:
· gather information on the products and their origin,such as the date of production and GPS coordinates of the place of production,
· verify that the products are deforestation-free andlegally produced; and
· carry out a risk assessment and, if necessary,implement risk mitigation measures.
Finally, the company must submit the DD-statement to the Commission's TRACES system before placingthe product on the market, importing it into the EU market, or exporting it fromthe EU.
Customs clearance of the product is not allowed until DD-statement has been made. Ifthe company does not provide the required information on the origin of theproducts, the company will not receive a DD-statement number, without which theproducts cannot be cleared, and they will be returned. Products aretherefore not allowed to enter the EU market without providing the required information.
What are the consequences if a company does not comply with the Regulation?
Violations of the Regulation can lead to significant penalties. Companies may be fined, withlegal entities facing fines of up to 4% of their annual EU-wide turnover.Authorities may also order the confiscation of products, or any income derivedfrom them, impose a temporary ban on placing products on the market, andexclude the company from public funding for a fixed period. Repeated failuresto comply may result in even stricter measures, such as a full ban on placingproducts on the market or exporting them.
Compliance with the EUDR is monitored by national authorities. In Finland, the competentauthority for enforcement is the Finnish Food Authority, while Customs isresponsible for monitoring the obligations related to imports and exports, suchas customs declarations and the use of the TRACES system.
To ensure compliance with EUDR, authorities will carry out checks and risk-basedcontrols. Falsification of data —such as misrepresenting product origin— isstrictly prohibited and punishable by law.
How can Sustashift help your company prepare for EUDR obligations?
Sustashift provides a software to help your company to:
· Gather and manage origin data efficiently and reliably
· Prepare and submit the required DD-statements toauthorities and customers in a timely and secure manner.
· Monitor regulatory changes and update companyprocesses to align with due diligence requirements
· Maintain consolidated information that can be storedand updated for the five years required by Regulation
Sustashifthelps you maintain access to the EU market, avoid fines, operate in complianceand build a competitive advantage through sustainability.
Interested?
Contact Sustashift and together we can find outhow we can help your business meet the obligations of the new EUDR and thrive sustainablyin the future. Now is the right time to make sure your company is ready for theEUDR obligations on time!
