The EU Commission is set to provide further clarity regarding the requirements of the European Union Regulation on Deforestation-free Products (EUDR). Yet, organisations don’t need to wait to begin their journey toward EUDR compliance.
While the EUDR is a European legislation, its implications are global. In the UK, companies with EU operations will have obligations as operators and/or traders and companies with customers in the EU will need to supply data to help them comply with the EUDR (find out more about what this means for UK companies here).
Here are six steps companies - including FSC certificate and licence holders - can take now to prepare for EUDR compliance before 31 December 2024.
FSC continues to strengthen its system and develop new integrated solutions so actors throughout the supply chain can meet EUDR legality and sustainability obligations, as well as other relevant sustainability legislation in Europe and globally.
STEP 1: Create an inventory list of your commodities and/or products in scope
The EUDR places obligations on entities involved in the supply chain of covered commodities and products including wood, rubber, palm oil, soy, beef, coffee, and/or cacao. Wood is the only commodity that must not only be legal and deforestation-free, but also “degradation-free” under the EUDR.
If you are unsure about whether a derived product or material is included in the EUDR, selected derived products are outlined in Annex I of the Regulation. For instance, many wood, pulp and paper fall within the EUDR scope. With regards to rubber, new pneumatic tyres are part of the EUDR scope. The full annex is available here.
If it is still unclear whether a product is in scope, we suggest evaluating each product against the following criteria:
1) Is the product made from one of the commodities covered?
2) Is the product using one of the HS codes covered in Annex 1?
If the answer to both questions is yes, the product is covered. If the answer to either question is no, the product isn’t covered.
If you are FSC-certified, we would also recommend identifying which products are FSC-certified and add both the HS Code and the FSC Product Code for these products. This additional exercise will help identify products that are potentially a risk due to being covered by the scope, but not yet FSC-certified.
STEP 2: Review the proposed requirements for FSC’s new Regulatory Module
FSC Regulatory Module is a standard for voluntary use by organisations applying for or holding FSC certification to extend their certification scope in order to align with EUDR due diligence obligations.
The FSC Regulatory Module sets the framework and requirements to:
- Introduce a due diligence system to support EUDR compliance, including information collection, risk assessment, and risk mitigation.
- Gather and transmit precise information on the origin of products (geolocation and time of production).
- Ensure that only deforestation-free materials enter FSC Chain of Custody.
The proposed additional requirements within the FSC Regulatory Module can be put in context by reviewing the info kit about the module here, and learning what requirements of the module apply to your unique organisation based on ‘user type’ with our interactive user journey tool here: FSC EUDR (fsc-eudr-journey.org).
STEP 3: Review your current Due Diligence system against EUDR requirements
The EUDR will require operators and traders of forest-based supply chains to conduct comprehensive due diligence before placing goods on the EU market.
While due diligence obligations will vary according to the level of risk a given country will be benchmarked by the EU Commission, if you have a current Due Diligence system in place, consider assessing it for alignment and gaps with EUDR requirements.
These include:
- Collecting and transmitting precise product information and supporting evidence including description, country of production, date and time range of production, and geolocation data for production.
- Evidence of Due Diligence actions and mitigation plans for identified risks.
- Report on Due Diligence steps taken, including how you may currently produce Due Diligence Statements (DDS) for competent authorities that verify a product's origin and compliance.
For FSC-certified companies, you will receive further clarity on DDS obligations within the Regulatory Module as well.
STEP 4: Collaboratively prepare with your supply chain
Your trading partners may need to provide your business with detailed information to fulfil EUDR reporting requirements. Start communicating early to flag the type of information you will be requesting from them in the coming months, help them understand the implications and value for their business, and troubleshoot any data or information gaps.
More detailed steps:
- Take inventory of currently available data for transactions involving forest-sourced materials such as wood, pulp, or rubber.
- Identify potential gaps in information you will be required to source from suppliers based on the known EUDR reporting requirements – such as origin of raw materials down to plot of land and time of harvest, sourcing practices, and production processes.
- Identify and support suppliers to source missing information.
- Identify any information that will require additional discussion and clarification with suppliers.
- Evaluate the current risk profiles that exists in your supply chain. Supply chains or markets that are currently high-risk can likely continue to be categorised as such when the EU’s new risk assessment launches. Consider preparing risk mitigation measures accordingly with your suppliers.
- If you are an existing FSC certificate holder, encourage your supply chain to consider certification and FSC Regulatory Model in order for all to benefit from the ability to get the REG+ invoice claim and promote your materials as deforestation free once your supply chain is fully verified.
STEP 5: Plan for secure data exchange with trading partners
Meeting EUDR requirements will benefit from robust traceability of transactions in relevant supply chains from source to end point. Trading partners must agree on transaction details like volume, product, origin plot of land, time of harvest, and species with one another – and their trading partners in turn, and so on – to ensure all materials have been sourced according to EUDR standards. They will also need to show evidence of social compliance such as adherence to Free, Prior and Informed Consent (FPIC).
Assess with your trading partners the process and technical platforms you will use to exchange and verify this transaction data.
FSC is building a dedicated platform for FSC certificate holders called FSC Blockchain that will help facilitate this traceability requirement for participating certificate holders, amongst other benefits.
Built on blockchain technology, the platform enables participants to confidentially, flexibly, and efficiently access and exchange relevant data to assist with verification, due diligence and demonstrate conformity with evolving regulations.
FSC Blockchain will enable users to:
- Verify certification status of suppliers at the point of transaction.
- Generate verified and traceable claims regarding products traded between yourself and trading partners.
- Pass relevant data about the raw materials comprising FSC-certified products, such as geo-location of origin, time of harvest, species, product groups, and other essential information through the supply chain while maintaining confidentiality of trading partners.
STEP 6: Reach out about your intentions for EUDR compliance to your certification body
Certification bodies will likely experience a busy auditing period later this calendar year as the December deadline approaches. Reach out to relevant certification body now to express your intention to become EUDR compliant, and to confirm your plan to either use FSC EUDR Aligned with tools like FSC Regulatory Module and FSC Blockchain.
This communication can allow certification bodies to forecast demand for EUDR support and potentially assist with scheduling your audit during that demanding timeframe.
FSC Certificate Holders can also join the Early Adopters Programme to start this process. Check here for upcoming application periods for the programme.
Don’t wait for the full picture to progress – plan ahead and beat the rush!
While more details of EUDR will emerge in the coming months, our current licence and certificate holders can progress on their journey to successful compliance and avoid a sprint to the December deadline.
We also encourage business who don’t currently hold an FSC certification to reach out and learn more about these solutions as a strong foundation that helps you to align with EUDR.