The European Commission has proposed a one-year postponement of the enforcement of critical regulation aimed at reducing deforestation linked to both imported and produced/exported within the European Union. In a recent press release, the Commission highlighted that this draft amendment seeks to provide additional time for businesses to fully align with stringent environmental standards while maintaining the regulation's core objective of reducing deforestation on a global scale.
The extra 12 months would provide a "phasing-in period" to ensure proper and effective enforcement. From their press materials, this indicates that the commission is proposing additional time for businesses to prepare thoroughly, paving the way for more comprehensive regulation enforcement once it comes into effect. If approved by the European Parliament and Council, the regulation would apply from December 30, 2025, for large companies, and from June 30, 2026, for micro- and small enterprises (EU Press Release: 2024).
Additional EUDR Developments Released
In addition, the Commission announced several other EUDR-related guidance documents, including the following:
The European Commission has released further EUDR guidance, which is divided into 11 chapters covering various topics such as legality requirements, the timeframe for implementation, agricultural use, and product scope clarifications. The guidance also addresses traceability obligations, the functionalities of the Information System, penalties, and offers definitions for terms like "forest degradation," "operator," and "placing on the market" (EU Guidance Docs: 2024).
The Commission has expanded the EUDR FAQs, adding over 40 new answers to address questions raised by a diverse range of stakeholders from around the world.
The Commission also published the methodology it will use for EUDR benchmarking to classify countries as low, standard, or high risk, aiming to facilitate operator’s due diligence and enable competent authorities to effectively monitor and enforce compliance.
It noted that most countries are expected to be categorized as low risk, this will give the opportunity to focus collective efforts where deforestation challenges are more accurate. The final benchmarking system is expected to be completed by June 30, 2025.
Failing to Comply with EUDR: What Could Happen?
As the EU Deforestation Regulation (EUDR) deadlines approach, compliance has become an urgent priority for businesses operating within the EU. Failure to adhere to these new standards can result in severe financial and operational penalties.
One of the most immediate consequences is financial penalties, which are scaled according to the environmental damage caused and the value of the non-compliant commodities. These fines can be as high as 4% of a company’s annual turnover across the EU. Additionally, the products in question may be confiscated, along with any revenue generated from their sale, causing significant financial strain on the operator.
Beyond fines and confiscation, companies could also face exclusion from public procurement processes and lose access to public funding, grants, and contracts for a period of up to 12 months. This exclusion can affect a company’s ability to compete for lucrative government contracts, further damaging their business operations and long-term growth prospects.
In the case of serious or repeated non-compliance, companies may face temporary bans on placing products on the market or exporting them, effectively halting business activities and creating further disruptions. The regulation also restricts companies from utilizing simplified due diligence procedures if they have committed significant violations, adding another layer of complexity to their compliance processes.
For many companies, particularly smaller enterprises, these consequences could be financially devastating, making it all the more critical to adhere to EUDR requirements.
Leverage Our Expertise for EUDR Compliance During the Proposed EUDR Delay
While we await the official decision from the European Parliament and EU Council regarding the proposed delay in the EUDR phase-in period, we remain your trusted global service provider for EUDR compliance. Whether the original December 2024 deadline is maintained, or a postponement is approved, our solutions are designed to keep your business on track. We help you build a robust and comprehensive compliance framework that not only meets regulatory standards but also promotes long-term environmental responsibility.
We encourage clients to use this time to strengthen their understanding of EUDR requirements and integrate sustainable practices into their supply chains, ensuring compliance and resilience.
Here’s how we will support your business at every stage of the process:
Information and Data Collection It starts with collecting key information, such as supplier identification, GPS and polygons, and producer and plots survey or questionnaires. For data collection, we evaluate key aspects such as land use rights, environmental protection, forest-related regulations, and labor rights to ensure compliance at the producer, plot, and business levels. This process includes essential criteria like land legality, responsible resource management, biodiversity conservation, human rights, and anti-corruption regulations. By utilizing this structured approach, businesses can effectively manage their supply chains, enhancing transparency and ensuring adherence to the environmental and social standards required by the EUDR.
In the next phase we compile existing data from suppliers' process, companies begin by creating shipments and attaching farm data to each shipment. This ensures that every product is linked back to its origin. The system then screens the data for compliance with EUDR regulations. If any producer data doesn't meet the standards, the system will alert the user, offering an option to proceed while flagging potential non-compliance issues. This rigorous process ensures traceability and regulatory adherence from farm to shipment.
Risk Assessment
Following the initial data collection, a risk assessment is conducted to identify potential non-compliance. If risks are flagged, we do business by providing reports, engaging with suppliers, and implementing capacity-building measures to mitigate risks. Once these risks are addressed, companies can register their due diligence statements and proceed with third-party audits to maintain ongoing compliance.
After conducting risk assessments and mitigating potential issues, it's crucial to ensure that deforestation risks are thoroughly verified. Our Desktop Verification and Ground Truthing process plays a pivotal role in this next step. Through this process, deforestation alerts are evaluated using multiple layers of verification, beginning with desktop assessments through GIS and proceeding with field verifications when necessary. This ensures that businesses can confirm whether agricultural commodities comply with EUDR standards before being cleared of deforestation risks.
Risk Mitigation
The next phase is Risk Mitigation, where businesses take actionable steps to minimize identified risks. This involves certifying products to globally recognized standards, equipping producers with the necessary skills through Capacity Building, facilitating the Land Legality Process by providing accurate geospatial data, and supporting businesses in developing an Internal Control System. By ensuring compliance with these elements, companies can strengthen their operations, improve market access, and meet the stringent requirements of EUDR.
Register Due Diligence Statement
After addressing risk mitigation, the next step is the submission of the Due Diligence Statement, an essential requirement for placing products in the EU market under EUDR regulations. Businesses must collect detailed information, including product names, quantities, geolocation data, supplier and buyer information, and verifiable evidence that the products are deforestation-free and comply with relevant legislation.
Once all relevant information is collected, businesses must share this data with their buyers to ensure transparency across the supply chain. Following that, companies are required to submit their Due Diligence Statement into the EU Information System. This submission provides the EU authorities with detailed records, including product compliance with deforestation regulations, ensuring all commodities meet the environmental standards set by EUDR. This step is crucial in validating the traceability and legal production of the products being placed on the EU market.
Continuous Monitoring
After submitting the due diligence data, the final phase in ensuring EUDR compliance is Continuous Monitoring. This involves conducting third-party audits and performing an annual review of the risk assessment and mitigation plans. These regular checks ensure that businesses maintain compliance over time and can promptly address any new risks that arise. By implementing ongoing monitoring, companies can continuously improve their processes and maintain transparency in their supply chains. Even with the potential postponement, preparation for EUDR compliance is crucial. Stay ahead by ensuring your business meets the requirements for sustainability, traceability, and reporting obligations. Our expert guidance helps your company to use this additional time to by getting ahead of the requirements. Talk to our expert today and ensure your company is fully prepared to turn this into an opportunity for growth!
Resources
European Commission. (2024). The Commission strengthens support for EU Deforestation Regulation implementation and proposes extra 12 months of phasing-in time, responding to calls by global partners. Retrieved fromhttps://ec.europa.eu/commission/presscorner/detail/en/ip_24_5009
European Commission. (2024). Guidance on the EU deforestation regulation. European Commission Green Business. Retrieved from https://green-business.ec.europa.eu/publications/guidance-eu-deforestation-regulation_en
Writer: Kumara Anggita, Content Writer
Editor: Boby Hermawan Arifin, Head of Digital Marketing
About Writer
Kumara Anggita, serving as Koltiva's dedicated Content Writer, brings a wealth of experience from her six-year tenure in journalism in the fields of humanities and lifestyle, as well as her role as a writer in the tech industry. Her deep-rooted passion for gender equality and sustainability spurred her to enhance her reporting and storytelling skills through the EmPower Media Bootcamp by UN Women. Now, Kumara utilizes her platform to advocate for sustainable practices and gender equality through her compelling writing.
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