What is the EU Deforestation-free Regulation?

The EU Deforestation-free Regulation (EUDR) is a landmark initiative of the EU Green Deal From 30 December 2024, the EUDR will prohibit companies from selling into or exporting certain products from the EU, unless it can be proven they are “deforestation free” and produced in compliance with relevant laws.

The EUDR entered into force in June 2023. It aims to limit the EU market’s impact on global deforestation and forest degradation as well as biodiversity loss. In doing so, it aims to promote deforestation-free supply chains, reduce the EU’s contribution to greenhouse gases (GHG) emissions, and protect human rights and the rights of indigenous peoples.

To be compliant, companies will need to conduct extensive due diligence on the value chain of relevant commodities and products, involving measures such as verifying the origin of commodities, making sure that suppliers meet environmental and social regulation, and implement traceability systems to track products from farm to market. 

Which commodities are in scope? 

The regulation targets seven key commodities (cattle, cocoa, coffee, palm oil, rubber, soy, and wood) as well as specified derived products that are sold into or exported from the EU. Under the new rules, companies must prove that the commodities and derived products are deforestation-free and produced in accordance with local laws in the country of production. 

What is the relevance for companies?

From 30 December 2024, large companies dealing with the in-scope commodities will need to comply with the EUDR requirements. The impact on businesses will depend on several factors, such as the extent to which they rely on in-scopee commodities, their position in the supply chain (e.g. importer or trader) and the complexity of the supply chain, their existing sustainability practices, and their ability to conduct due diligence.

Immediate priorities should include understanding the requirements of the EUDR, defining a compliance framework, implementing a centralized data-gathering capability and necessary technology, and delineating roles and responsibilities within the organization.

Since regulatory scrutiny will be intense, companies that are already taking steps to ensure sustainable, transparent, and deforestation-free supply chains will be better positioned to comply with the EUDR’s far-reaching requirements and grasp all the opportunities it offers.

Getting ready for the EU Deforestation-free Regulation

To prepare for the EUDR, Deloitte Climate & Sustainability in collaboration with the EMEA Sustainability Regulation Hub and Deloitte Spain organized an informative webinar on 2 July 2024, providing a chance to stay ahead in navigating the evolving EU regulatory landscape.

 The session commenced with an in-depth overview of the EUDR held by Simon Brennan, Head at EMEA Sustainability Regulation Hub, designed to equip businesses with crucial insights into compliance and the broader implications for supply chains, outlining key requirements, application timelines, and the current status of guidelines and reviews.

A panel discussion followed, chaired by Daniele Strippoli, NSE Nature Lead & Partner at Deloitte Climate & Sustainability, tackling the regulation’s impact on different companies, supply chain readiness, and the challenges of verifying deforestation-free commodities.

The webinar concluded with an interactive Q&A session, providing an opportunity to address specific concerns and gain further clarity on the EUDR. 

Watch the video recording below