4 min read
EUDR Scope and Compliance: Insights for Forest Product Producers
ResourceWise
:
Oct 8, '24

In a significant move on October 2, the EU Commission announced its plan to delay the implementation of the European Union Deforestation Regulation (EUDR) by one year. While this decision still awaits approval from the European Parliament and the Council, it provides a temporary reprieve for forest products producers who are racing against time to comply with these new regulations. Alongside the announcement, the EU Commission released the third edition of its FAQs, shedding light on key aspects of the Regulation.
Addressing Scope FAQs
The most recent EUDR FAQ update offers vital insights into the scope of the EUDR, crucial for forest product producers to understand as they prepare to align their operations with the regulation's requirements. Let’s review some of the key FAQs addressing the EUDR’s scope.
EUDR Product Scope
The EUDR's reach is defined by the products listed in Annex I. If a product is not included in this list, it doesn’t need to comply with the regulation. For example, even if a bar of soap contains palm oil, it’s not covered by the EUDR because soap isn’t listed in Annex I.
Products that fall outside of this scope, like cars with leather seats or natural rubber tires, are also exempt from the regulation, even if they use materials linked to regulated commodities.
It's worth noting that the European Commission has the authority to update the list of covered products. They will also consider expanding the regulation to include more commodities if they find evidence that these items contribute to deforestation and forest degradation. The first review of this product list is set to occur within two years of the regulation taking effect.
By understanding these guidelines, businesses can better navigate the requirements of the EUDR and ensure they remain compliant while making responsible sourcing decisions.
Commodities Produced Within the EU
A critical point of clarification is that commodities produced within and imported to the EU are treated the same. For instance, an EU-based company producing chocolate, a product listed in Annex I, is considered an operator under the EUDR. This means that, despite a product being produced domestically in the EU, companies must adhere to the regulation's due diligence obligations.
Understanding Packaging and Its Role in the EUDR
Wood Used for Packaging
When it comes to wood used for packaging, the regulation specifies that standalone packaging materials are subject to EUDR compliance if placed on the market as a product in their own right. However, if the packaging is solely used to support, protect, or carry another product, it may not fall under the regulation. Understanding these nuances is crucial for producers who deal with packaging materials, ensuring they comply with the regulation to avoid potential penalties.
New Guidance: Empty Packaging Returned by the Retailer to the Supplier
Another area of interest is the return of relevant empty packaging by retailers to suppliers. If such packaging was initially placed on the market as standalone packaging, it remains subject to the EUDR's requirements upon return. However, once it functions strictly as packaging material supporting other products, it falls outside the regulation's scope. This detail emphasizes the importance of knowing how your products are classified and used in the market.
New Guidance: Recycled Paper and Paperboard
Recycled paper and paperboard present unique challenges within the EUDR framework. Many products include a small amount of virgin pulp or pre-consumed recycled materials—like scraps of cardboard box production—to enhance their strength.
According to Annex I of the EUDR, the regulation does not apply to products made entirely from materials that have already completed their lifecycle and would otherwise be considered waste, as defined by the Waste Framework Directive 2008/98/EC. This means that if a paper or paperboard product is composed entirely of such recycled materials, it is not subject to the regulation.
However, if the product contains any virgin pulp, it must adhere to the EUDR requirements. In this case, businesses will need to trace the non-recycled material back to its plot of origin using geolocation methods.
Annex I also specifies that by-products of manufacturing processes are generally covered by the regulation. However, recycled paper and paperboard classified as recovered materials (i.e., waste and scrap) are exempt.
This requirement underscores the need for rigorous tracking and documentation practices for producers working with mixed materials.
New Guidance: Due Diligence and DDS Requirements for Multiple Processes
When the same producer processes a relevant product multiple times, due diligence and submission of a Due Diligence Statement (DDS) are only necessary for the final product placed on the market.
For example, if a company processes cocoa beans into cocoa powder and then into food preparations, its obligations only apply to the food preparations. In this case, the company must ensure compliance and submit a DDS before selling the food preparations.
If the company is a small or medium-sized enterprise (SME), it may not need to exercise due diligence or submit a DDS for the food preparations, as long as the previous operator (who supplied the cocoa beans) has already fulfilled these requirements. Instead, the SME only needs to keep a due diligence reference number from the original operator.
Implications for Forest Products Producers
The insights from these FAQs have important implications for forest product producers, as they offer essential information that can impact business strategies and operations. Understanding the scope and nuances of the EUDR is essential for compliance, as failing to adhere to these regulations could result in severe penalties and operational disruptions.
Non-integrated producers face greater risks due to the complexity of their supply chains, which often involve sourcing raw materials from multiple stakeholders and regions, increasing the chances of non-compliance.
To mitigate these risks, producers need to begin preparing for compliance now. This includes reviewing their supply chain processes, identifying potential areas of risk, and implementing necessary changes to ensure adherence to the EUDR requirements. Adopting a proactive approach will not only help avoid potential penalties but also ensure smooth operations when the regulation goes into effect, reinforcing their market position and maintaining trust with consumers and partners.
Streamlining EUDR Compliance with ResourceWise's Forest Trackt
Navigating the complexities of EUDR compliance can be daunting. This is where ResourceWise's Forest Trackt solution comes into play. By automating compliance processes, our platform minimizes manual data entry and the associated risks of errors. Forest Trackt seamlessly integrates with our SilvaStat360 platform, using advanced learning algorithms to create accurate polygon definitions and source coordination.
Forest Trackt's ability to measure compliance percentages through proprietary datasets sets it apart from other solutions, making it an indispensable tool for companies with intricate supply chains. The solution’s comprehensive approach ensures that producers can efficiently meet EUDR requirements, maintaining transparency and accountability throughout their operations.
Forest Trackt provides an end-to-end solution that streamlines each step of the compliance process—from data acquisition to due diligence reporting. This not only saves time and resources but also enhances accuracy and reduces administrative overhead.
While some may view the potential delay in the EUDR's implementation as temporary relief, it is crucial for forest product producers to proactively prepare for compliance now. Understanding the regulation's scope and leveraging innovative solutions like Forest Trackt can ensure a seamless transition to EUDR-compliant operations.
Discover more about Forest Trackt by visiting our solution page.