What is EUDR? A Complete Guide for SMEs

What is the EU Deforestation Regulation (EUDR)?

The EU Deforestation Regulation (EUDR) is a groundbreaking law adopted by the European Union to combat global deforestation and forest degradation. It came into force on June 29, 2023 (EUR-Lex: Regulation (EU) 2023/1115), and represents one of the most significant environmental regulations affecting international trade.

The regulation aims to ensure that products placed on the EU market have not contributed to deforestation or forest degradation anywhere in the world after December 31, 2020.

Key Point: The EUDR makes it mandatory for companies to prove that their products are "deforestation-free" before placing them on the EU market.

Who Needs to Comply with EUDR?

The regulation applies to two main groups of economic actors:

Operators

Companies that place relevant products on the EU market for the first time or export them from the EU. This includes:

• Importers bringing commodities into the EU
• EU-based producers placing products on the market
• Exporters sending products outside the EU

Traders

Businesses in the supply chain that make products available after they've already entered the market. This includes:

• Wholesalers and distributors
• Retailers selling to end consumers
• Any business handling the products between import and final sale

What About SMEs?

Small and medium-sized enterprises (SMEs) are not exempt from EUDR, but the regulation acknowledges their specific challenges. SMEs are expected to comply with the same core requirements, though some simplified procedures may apply for micro and small enterprises.

The EU recognizes that SMEs may need additional support and has published specific guidance for smaller businesses. That's exactly why EUDR Simple exists – to make compliance accessible and affordable for businesses of all sizes.

Which Commodities Are Covered?

The EUDR covers seven key commodities and their derivative products that are most associated with deforestation:

The European Commission may expand this list to include other commodities and products in the future based on assessments of their contribution to deforestation.

Key Compliance Requirements

Under the EUDR, operators must fulfill three core obligations before placing products on the EU market:

1. Due Diligence Statement (DDS)

You must submit a Due Diligence Statement to the EU Information System before each shipment. This declaration confirms that you have exercised due diligence and that the products are deforestation-free and legally produced. See the European Commission overview and the official legal text for details.

2. Information Collection

Gather comprehensive information about your products, including:

• Geolocation data: Exact coordinates of production plots (GPS coordinates)
• Product description: Type, quantity, and origin
• Country of production: Where the commodity was produced
• Supplier information: Details of all suppliers in your chain
• Certification and permits: Proof of legal production

3. Risk Assessment and Mitigation

Conduct a risk assessment to determine if there's a risk of deforestation or illegality, considering:

• The country or region of production
• Complexity of the supply chain
• Type of commodity
• Presence of indigenous peoples' rights concerns
• Previous compliance issues

If risks are identified, you must implement mitigation measures such as requesting additional information, conducting audits, or seeking independent verification.

Traders' Obligations

While traders have lighter obligations than operators, they must still:

• Collect and retain the DDS reference number
• Maintain information on their suppliers and customers
• Ensure traceability throughout the supply chain

Important Deadlines and Timeline

Understanding the EUDR timeline is crucial for planning your compliance strategy:

Important: While SMEs have a six-month grace period, it's highly recommended to start preparing as early as possible. Setting up due diligence systems and collecting supply chain data takes time.

Getting Started with EUDR Compliance

Beginning your EUDR compliance journey doesn't have to be overwhelming. Here are practical first steps:

Step 1: Assess Your Exposure

Determine which of your products fall under EUDR scope. List all commodities and derivative products you import, produce, or trade.

Step 2: Map Your Supply Chain

Identify your suppliers and understand your supply chain structure. You'll need to trace products back to the production plot level.

Step 3: Start Collecting Data

Begin gathering the required information from your suppliers:

• Geolocation coordinates of production areas
• Legal documentation and certifications
• Production and harvest dates
• Supplier contact information

Step 4: Implement a Due Diligence System

Establish processes and systems for:

• Regular data collection and updates
• Risk assessment procedures
• Documentation management
• Supplier communication

Step 5: Use the Right Tools

Consider using specialized software like EUDR Simple to streamline your compliance process. Manual compliance is possible but time-consuming and error-prone.