Blog Post

EUDR Compliance: What You Need to Know and How SCS Can Help

by Lindsey Mauldin | Posted:
EUDR Compliance: What You Need to Know and How SCS Can Help

In this blog we cover the following topics and questions:

A brief introduction to the European Union Deforestation Regulation (EUDR)

As global endeavors to curb deforestation gain momentum, companies around the world are looking to tighten their operations and secure their supply chains to achieve compliance with the European Union Deforestation Regulation (EUDR). Adhering to EUDR goes beyond mere regulatory compliance — this regulation stands as a pledge to sustainability and ethical sourcing. Manufacturers, operators, and traders of key commodities and their derived products in the EU market will be impacted by EUDR, which aims to prevent the import and export of products linked to deforestation and forest degradation.  

The EUDR took effect on June 29, 2023, and will apply to EU imports starting on December 30, 2024, with some special provisions for small and medium-sized enterprises (SMEs) with a start date of June 30, 2025. However, earlier this week, the European Commission proposed an extra 12 months of phasing-in time for companies who are required to comply with the EUDR. If approved by the European Parliament and the Council, it would make the law applicable on 30 December 2025 for large companies and 30 June 2026 for micro- and small enterprises.

The EUDR covers seven commodities that are heavily linked to deforestation and forest degradation: soy, beef, palm oil, wood, cocoa, coffee, and rubber. To comply with EUDR, these commodities and their derived products must be deforestation-free, covered by a due diligence statement attesting to that fact, and must adhere to the legal sourcing regulations of the country of origin. The cut-off date for the allowance of deforestation or forest degradation to produce these commodities was December 31, 2020 — this means that products produced after this date must not have caused deforestation and forest degradation.  

In this blog, we answer some of the most frequently asked questions surrounding EUDR compliance. We also explain how SCS Global Services can help you meet these requirements and demonstrate your commitment to environmental and social responsibility.  

What is a due diligence statement and what information should it contain?

A due diligence statement is a document that first operators (importers) must submit for each shipment of commodities and their derived products covered by the EUDR. A due diligence statement provides information on the supply chain, the origin, legal compliance, and the deforestation-free status of the products. The statement must include the following information: 

  • The name and contact details of the operator or trader
  • The product description, including the commodity and its derived products, the volume or weight.  
  • This information must be formatted correctly and meet all relevant regulations, such as the Combined Nomenclature (CN) and Common Customs Tariff. The EU Customs Tariff (TARIC) database provides the complete list of CN codes and applicable tariffs. CN codes are crucial for declaring goods in customs procedures and ensuring accurate classification for tariffs and trade statistics.
  • The country or countries of origin and the geo-coordinates of the exact locations where the commodity was sourced
    • Geo-coordinates can be collected using the Global Navigation Satellite System (GNSS)
  • The evidence of legal compliance of the production of the commodity with the applicable legislation of the country or countries of origin, such as permits, licenses, certificates or other official documents
  • The evidence of deforestation-free status of the production of the commodity, such as satellite imagery, land use maps, traceability systems, or other verifiable sources
  • The risk assessment and mitigation measures taken by the operator or trader to ensure that the commodity and its derived products do not cause deforestation and forest degradation, such as audits, inspections, monitoring or other verification activities
  • The date and signature of the operator, trader, or a representative. 

Operators and traders that are not small and medium-sized enterprises (SMEs) must also publicly report on their due diligence system annually. SME operators may refer to previously submitted due diligence statements if they have verified that the due diligence has been exercised. 

What are the requirements for geo-location and what are the best practices to geo-locate products?

One of the most challenging aspects of the EUDR is the requirement to provide geo-coordinates of the exact locations where the commodities were sourced. This means that operators and traders must be able to trace their products back to the farm, plantation, forest, or other production site. This level of granularity is necessary to verify that the products do not originate from recently deforested or degraded land, which is defined as land where the tree canopy cover has been reduced by more than 10% since December 31, 2020.

For some commodities, simply documenting the coordinates on a spreadsheet could suffice. But for other products — and depending on the complexity and diversity of the supply chain — different approaches and technologies can be used to increase transparency and ensure accuracy of geolocation. Some options for improving accuracy of geo-coordination include: 

  • Barcodes and QR codes that can encode product information and be scanned at different points of the supply chain;
  • Radio-frequency identification (RFID) tags that can transmit product information wirelessly and be read by RFID readers;
  • Blockchain technology that can create secure and transparent records of transactions and product movements along the supply chain;
  • Global Positioning System (GPS) devices that can record and transmit the geo-coordinates of the production sites and the transport vehicles;
  • Satellite imagery and remote sensing that can provide high-resolution images and data of the land use and land cover changes at the production sites;
  • Geographic Information System (GIS) software that can store, analyze and visualize the spatial data and information of the supply chain. 

What are the due diligence requirements for fair labor practices and what language is required to maintain compliance?

Another important aspect of the EUDR is the due diligence requirement for labor and fair practices, which aims to ensure that the production of the commodities and their derived products does not violate the human and labor rights of the workers and the local communities. This requirement is based on the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work, which covers four areas: freedom of association and the right to collective bargaining, the elimination of forced or compulsory labor, the abolition of child labor, and the elimination of discrimination in respect of employment and occupation.

To comply with this requirement, operators and traders must provide evidence of legal compliance of the production of the commodity with the applicable labor and social legislation of the country or countries of origin, such as labor contracts, wage slips, social security payments, health and safety records, or other official documents. They must also assess and mitigate the risks of labor and human rights violations in their supply chains, such as by conducting audits, inspections, interviews, surveys, or other verification activities.

The language that operators and traders should use to describe their due diligence for labor and fair practices should be clear, accurate, and consistent with the ILO standards and the United Nations Guiding Principles on Business and Human Rights. Companies and producers required to comply with EUDR should be prepared to confer with their legal teams or to hire organizations with trusted EUDR experience and expertise to ensure that the language they use to describe their fair labor practices is legally grounded, demonstrated in operations, communicated to all company employees, and verifiable throughout any auditing by third parties. 

What are the benefits of certifications for EUDR compliance and overall sustainability?

While the EUDR does not explicitly recognize any certification schemes as sufficient proof of EUDR compliance, some certifications can provide many benefits for operators and traders that want to demonstrate their adherence to the EUDR requirements and their commitment to sustainability. Reasons for seeking certification may vary between operators, but there are myriad advantages of doing so within the greater context of achieving EUDR compliance. We outline just a handful of these benefits below: 

  • Reduce the risk of sourcing commodities and their derived products that cause deforestation and forest degradation, as well as labor and human rights violations;
  • Simplify the due diligence process by providing credible and verifiable evidence of legal compliance and deforestation-free status of the products;
  • Enhance the traceability and transparency of the supply chain by using reliable and consistent methods and tools to track and report the origin and movement of the products;
  • Improve the efficiency and effectiveness of the supply chain management by adopting best practices and standards for quality, safety, environmental and social performance;
  • Increase the market access and competitiveness of the products by meeting the demand and expectations of customers, consumers, regulators, and stakeholders who value sustainability;
  • Deepen brand integrity by taking advantage of add-on modules for certain certification standards, such as FSC and SFI Fiber Sourcing — which are already designed to answer questions about supply chains and traceability.
  • Build trust and reputation by showcasing how products contribute to the conservation of forests and biodiversity, the mitigation of climate change, and the improvement of livelihoods and well-being of workers and communities. 

How can SCS Global Services help you with EUDR compliance?

As a founding member of the Forest Stewardship Council (FSC) certification program, SCS has unparalleled experience auditing against responsible forestry requirements and regulations around the world. In fact, SCS currently audits against all leading forest management certification standards including FSC Chain of Custody, Sustainable Forestry Initiative (SFI), Programme for the Endorsement of Forest Certification (PEFC) chain of custody (CoC), and the American Tree Farm System (AFTS).  

SCS has closely followed the development of EUDR by technically reviewing all official publications and actively participating in events and forums to convert the information into actionable steps for our customers. We have developed support services that complement existing certification schemes and are working to empower clients in achieving EUDR compliance.  Our comprehensive EUDR services include: 

  • EUDR Consulting Services
    • EUDR Gap Analysis for operators and suppliers  
    • Corporate regulatory and implementation education and advisory
    • Needs assessment and strategy development
    • Due diligence system development and review
    • Supply Chain Risk Assessment and Monitoring  
    • Deforestation Risk AssessmentCommodity and value chain traceability
    • Customized verification checklists
  • Compliance Assessments
    • We verify EUDR compliance of various players within your supply chain.
  • Due Diligence Integrity Assessments
    • We verify the integrity of the EUDR due diligence system and statements.
  • Self-Paced Training
    • Industry-specific, self-paced training on EUDR compliance for those in the coffee, wood, palm oil, soy, cocoa, rubber, and other EUDR impacted industries. 

In addition to the above services and certifications, SCS continues to track and assess the ever-evolving landscape of businesses affected by EUDR. Because EUDR is already having such broad impacts across many different sectors, SCS is committed to remaining vigilant in meeting the needs of customers around the world — especially if those same customers are operating in EUDR-adjacent markets. Below we list a number of additional certifications that our customers find invaluable for supporting other actors and agents along EUDR-impacted supply chains.  

As international efforts to combat deforestation intensify, compliance with the EUDR is not just a regulatory requirement but also an opportunity to demonstrate your company’s commitment to sustainability and responsible sourcing. We invite you to contact SCS today for expert support in achieving EUDR compliance. For more information, be sure to watch the replay of our latest webinar, “Navigating the European Deforestation Regulation.”  

Author

Lindsey Mauldin