What is Due Diligence Under EUDR?
The EU Deforestation Regulation requires operators (businesses that place covered commodities on the EU market for the first time) to establish and implement a due diligence system before placing products on the market.
The due diligence system has three key components:
- Information gathering - Collect comprehensive data about products and supply chains
- Risk assessment - Evaluate the risk of deforestation or forest degradation
- Risk mitigation - Implement measures to reduce identified risks to negligible levels
1. Information Gathering Requirements
Operators must collect and maintain the following information:
Product Information
- Description of the relevant product and quantity
- HS customs code
- Country of production
- Geolocation coordinates (latitude/longitude) of all plots where commodities were produced
Production Information
- Date or time period of production
- Confirmation that products are deforestation-free
- Confirmation that products comply with relevant legislation of country of production
Supply Chain Information
- Name, address, and contact details of operators or traders who supplied or were supplied with products
- Information and documentation to demonstrate due diligence has been exercised
2. Risk Assessment
After gathering information, operators must assess whether there is a risk that the products are not deforestation-free or were not produced in accordance with relevant legislation.
Risk Factors to Consider
- Country risk level - Check EU's country risk classification (low, standard, or high risk)
- Presence of forests - Does the production area contain or was it recently forested?
- Indigenous rights - Are there concerns about indigenous peoples' rights?
- Complexity of supply chain - How many intermediaries are involved?
- Risk of mixing - Could compliant and non-compliant products be mixed?
- Supplier compliance history - Track record of previous compliance issues
Simplified Due Diligence for Low-Risk Countries
For products from countries or parts of countries classified as low risk by the European Commission, operators can apply simplified due diligence procedures. However, this does NOT exempt you from information gathering - you still need GPS coordinates and production dates.
3. Risk Mitigation
If your risk assessment identifies a risk that is not negligible, you must implement risk mitigation measures before placing products on the market.
Common Mitigation Measures
Additional Information
- • Request more detailed geolocation data
- • Obtain additional documentation from suppliers
- • Verify production dates more precisely
- • Get certification or audit reports
Independent Verification
- • Commission third-party audits
- • Use satellite imagery analysis
- • Conduct on-site inspections
- • Verify supplier certifications
Supply Chain Adjustments
- • Switch to lower-risk suppliers
- • Implement supplier improvement programs
- • Strengthen contractual requirements
- • Increase monitoring frequency
Enhanced Monitoring
- • Set up continuous monitoring systems
- • Implement alert systems for changes
- • Conduct regular supplier assessments
- • Track deforestation alerts in sourcing areas
Important: If you cannot reduce the risk to a negligible level through mitigation measures, you must NOT place the products on the EU market.
Due Diligence Statement (DDS)
After completing your due diligence and concluding that the risk is negligible, you must submit a Due Diligence Statement (DDS) to the competent authorities through the EU Information System.
What Goes in the DDS?
- Confirmation that due diligence has been exercised
- Reference to the relevant products and quantities
- Country or countries of production
- Information about the operator
- Supporting documentation reference numbers
DDS Reference Number
Upon successful submission, you will receive a DDS reference number. This number must be:
- Retained for at least 5 years
- Provided to your customers (traders) in the supply chain
- Made available to competent authorities upon request
Record-Keeping Requirements
All operators and traders must maintain comprehensive records for at least 5 years:
Mandatory Record Retention
- ✓ All information collected during due diligence
- ✓ Risk assessment documentation and conclusions
- ✓ Risk mitigation measures implemented
- ✓ Due Diligence Statements and reference numbers
- ✓ Supplier and customer information
- ✓ Supporting documentation (contracts, invoices, certificates)
Penalties for Non-Compliance
Member States must establish penalties for violations, which may include:
- Fines of up to 4% of annual EU-wide turnover
- Confiscation of products and revenues
- Exclusion from public procurement
- Temporary prohibition on placing products on the market
Getting Started with Due Diligence
- Map your supply chain - Identify all suppliers and production locations
- Establish data collection processes - Set up systems to gather required information
- Develop risk assessment methodology - Create a consistent approach to evaluating risks
- Define mitigation procedures - Prepare standard responses for different risk levels
- Implement record-keeping systems - Ensure 5-year retention compliance
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