European Union Deforestation Regulation: are you affected?

The EU Deforestation Regulation (EUDR) aims to prevent deforestation by ensuring that products sold within the EU do not contribute to the destruction of lands. This regulation mandates that companies must prove their supply chains are deforestation-free, impacting trade-active members by potentially increasing compliance costs and altering trade dynamics.

When will EUDR come into effect?

The implementation will commence on December 30, 2024, with a subsequent phase for SMEs (employ fewer than 250 employees and have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro) starting on June 30, 2025.

What to expect?

At a minimum, the EUDR will impose additional supply chain management and reporting obligations on Australian businesses exporting affected products to the EU. Practically, compliance obligations may also extend to (non-exporting) participants in these supply chains. Some Australian products may be unable to enter the EU market.

What to prepare?

To comply with the EUDR, you must ensure and certify that any products you export to the EU (and their components) are produced on land that has not experienced deforestation or forest degradation since December 31, 2020.

• Due diligence requires three steps:
  • Information Collection: Gather details about the commodity/product (e.g. quantity, supplier, country of production, legal harvest evidence and geographic coordinates of production plots). This information must be included in a due diligence statement submitted via the Information System. If the required information cannot be collected, the product cannot be placed in the EU market or exported.
  • Risk Assessment: Use the collected information to assess and evaluate the risk of non-compliant products entering the supply chain. Operators must demonstrate how they checked and determined the risk. Companies are required to gather polygon shapes and geolocation data for land areas where specific commodities (such as cocoa, coffee, soy, palm oil, cattle, wood, and rubber) are harvested. After collecting this data, they must perform a deforestation analysis to confirm that these commodities and their products come from land that has not experienced deforestation since December 31, 2020.
  • Risk Mitigation: Implement measures to reduce any identified risks to negligible levels. These measures must be documented.

If a part of a product is non-compliant, it must be identified and separated before the product is marketed or exported. If separation isn’t possible, the entire product is considered non-compliant. For example, if several sources of a commodity are mixed into a product and one plot of land is deforested after 2020, the whole product is non-compliant.

What is deforestation due diligence registry?

The deforestation due diligence registry is an online tool that can assist you in creating and submitting due diligence statements for your supply chains.

• Indicate the origin of the materials
• Provide details of the products
• Use the dashboard to view and manage due diligence statements
• Manage statements in bulk through an Application Programming Interface (API).

Which industries will be affected?

This regulation applies to products that comprise of include the following raw materials and commodities:

• cattle
• wood
• cocoa
• soy
• palm oil
• coffee
• rubber
• leather
• chocolate
• tyres
• furniture

Do you require further assistance?

If you believe the EUDR may affect your business, or the industry in which you operate, we would like to hear from you. Please contact Ai Group’s Industry Development and Policy team at industry.policy@aigroup.com.au