On June 09, 2023, the REGULATION (EU) 2023/1115 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on "the making available on the Union market of certain raw materials and products associated with deforestation and forest degradation and their export from the Union..." was published.
Objective of the regulation
The regulation, known as the "EUDR" for short, aims to reduce EU consumption of products associated with deforestation and forest degradation. An effort to reduce greenhouse gases and emissions and counteract the global loss of biodiversity.
Goods concerned
The regulation names 7 goods that are affected by the regulation: Cattle, cocoa, coffee, palm oil, soy, rubber and timber (furniture, paper and plywood included).
Entry into force of the EUDR
- 29.06.2023 - entered into force
- Update 02.10.2024: December 30, 2025 for large companies
- Update 02.10.2024: June 30, 2026 applicable for micro and small enterprises (SMEs)
More about the update from 02.10.2024 here.
What are SMEs? - Small and medium-sized enterprises within the meaning of Article 3(1) or (2) of Regulation 2013/34/EU*
Companies that meet the criteria in the following paragraphs on 31.12.2020.
Microenterprises
Micro-enterprises are companies that meet 2 out of 3 of the following criteria on the balance sheet date:
- Balance sheet total: EUR 350,000
- Net sales: EUR 700,000
- Average number of employees: 10 during the financial year
Small companies
Small companies are companies that met 2 out of 3 of the following criteria on the balance sheet date:
- Balance sheet total: EUR 4,000,000
- Net sales: EUR 8,000,000
- Average number of employees: 50 during the financial year
Specifications
Introduction of strict regulations for the placing on the market, supply and export (to and from the EU) of:
- "relevant raw materials"
- "relevant products"
It must be demonstrated that...
"The products are "deforestation-free" (concerning areas after 31.12.2020),
Article 3 - REGULATION (EU) 2023/1115 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
the relevant legal provisions of the country of production have been complied with
and there is a corresponding duty of care."
Duty of care
The due diligence obligation must be fulfilled by the market participant for all relevant products of each individual supplier.
This includes the following:
The collection of information, data, documents necessary to meet the requirements set out in Article 9
Risk assessment measures pursuant to Article 10
Risk mitigation measures in accordance with Article 11
Compliance with information requirements - CLICK FOR DETAILS
To fulfill the information requirement, information, data and documents must be documented/collected, stored for 5 years and made available to authorities.
This includes information such as name, raw materials contained, quantity, country of production, geolocation, time information, data of the companies participating in the market and verifiable information on applicable legislation.
More details here: Article 9(1)(a) - (h) - Request for information
Compliance with the risk assessment - CLICK FOR DETAILS
A risk assessment is carried out on the basis of the information provided in the previous paragraph.
- Is there a risk that relevant products placed on the market are non-compliant?
- Placing on the market is only permitted if it is ensured that there is no or only a negligible risk of non-compliance of the relevant products.
Country risk classification, forests and indigenous peoples of the producing country as well as proof of ownership are factors in the risk assessment.
More details here: Article 10(2), points (a) - (n) - Risk assessment
In the case of timber products with a FLEGT license, it is at least ensured that the relevant legal requirements of the country of production have been complied with.
The risk assessment must be documented and reviewed annually.
Fulfillment of risk mitigation - CLICK FOR DETAILS
In the case of assessment results that are not risk-free or negligible, risk mitigation must be carried out in accordance with the procedure and measures described in Article 11:
- Request for additional information
- Conducting independent surveys and audits
- Taking other measures in connection with information requests, for which the support of suppliers is also possible.
Furthermore, the following strategies, controls and procedures should be in place:
- Model procedures for risk management, reporting, record keeping, internal control and compliance management, for non-SME market participants including the appointment of a compliance officer at senior management level.
- an independent review body to review the internal policies, controls and procedures referred to in point (a) for all non-SME market participants.
The decision and implementation of the risk reduction must be documented and submitted to the authorities.
More details here: Article 11, paragraph 1 & 2 - Risk mitigation
Outlook and support for TimberTec customers
TimberTec customers have the advantage that our systems already process master data, which is also necessary for EUDR requirements, and further EUDR-specific data can be added. This enables us to support our customers in fulfilling their due diligence obligations by automatically exchanging data with the EU information system. The data is recorded and thus the due diligence obligation is fulfilled. This data can also be forwarded for further processing.
Stay informed
TimberTec is currently in contact with customers and industry associations to discuss how TimberTec can best support its customers in relation to EUDR. If you would like to be kept up to date with this work, please leave your email below for our EUDR NEWSLETTER.