EU Commission proposes to delay the implementation of the EUDR by a year, and publishes new guidance

The European Commission has announced plans to delay the implementation of its Deforestation-free Products Regulation[1] (EUDR) by 12 months, following expressions of concern from some “global partners” who felt under-prepared. The Commission emphasised that the extension proposal “in no way puts into question the objectives or the substance of the law, as agreed by the EU co-legislators”. 

The EUDR was introduced as part of a broader ambition to reduce the extent to which EU imports drive global deforestation and forest degradation. It applies to businesses dealing with seven commodities that are associated with a higher risk of deforestation: cocoa, coffee, soy, palm oil, wood, rubber and cattle. We’ve set out more detail on the EUDR and the scope of its application in our Getting Ready series. 

More time to get ready

We expect the proposed delay to be approved by the European Parliament and the Council (the Commission has ‘invited’ them to do so by the end of the year), meaning that the EUDR will apply from 30 December 2025 for large companies and 30 June 2026 for micro- and small enterprises. 

The proposal also extends the Commission’s deadline to classify third countries as low, standard or high risk until 30 June 2025. A preliminary document setting out the Commission’s methodological principles in approaching this classification was released alongside the delay announcement. The Commission expects that “a large majority of countries worldwide will be classified as ‘low risk’'”. 

Despite the delay, the Commission has confirmed that the dedicated IT system where businesses will register due diligence statements in compliance with the EUDR will be fully operational this December, and that due diligence statements can be submitted even before the EUDR’s entry into application, providing additional time for companies to familiarise themselves with the system. 

Newly-released guidance

The Commission has released long-awaited draft guidance on the EUDR. The guidance document contains 11 chapters that elaborate on a wide range of the provisions set out in the EUDR, along with an Annex of example scenarios. 

The Commission has also published an updated FAQs document which includes more than 40 additional questions and answers to assist businesses with their EUDR preparations. 

Together, the guidance and the updated FAQs document provide some much-needed clarity on key components of the EUDR. We have set out areas where there have been useful clarifications below.

Further clarity on key concepts and definitions

Chapter 1 of the guidance offers further explanation of the key concepts of ‘placing on the market’, ‘making available on the market’ and ‘exporting’, supported by 10 example scenarios in Annex I, which illustrate how the regulation will be applied in practice. Additional clarity is also provided in the new FAQs – for example, FAQ 2.10 clarifies the position on own use products in cases where goods have already been placed on the EU market. 

In-scope businesses will likely wish to review their existing scoping analyses to ensure that they reflect the further clarity that has been provided.

Reliance on due diligence statements produced higher up the supply chain

Chapter 4 of the guidance focuses on the due diligence process and the definition of ‘negligible risk’ of deforestation or forest degradation. It elaborates on a provision in the EUDR that allows non-SME operators to refer to due diligence statements that have already been submitted upstream in the supply chain, so long as they ascertain that the due diligence was properly carried out. This process does not necessarily involve having to “systematically check every single due diligence statement submitted upstream”. Rather, it could be satisfied by, for example, verifying that “upstream operators have an operational and up-to-date due diligence system in place, including adequate and proportionate policies, controls, and procedures to mitigate and manage effectively the risks of non-compliance of relevant products”. 

Guidance on legality 

Chapter 6 of the guidance sets out further detail on the requirement that relevant products are produced in accordance with the relevant legislation of the country of production. Crucially, the guidance clarifies that this requirement only refers to “applicable laws concerning the legal status of the area of production” as opposed to, for example, laws impacting the production process more generally. Such legislation must also be viewed through the prism of the objectives of the EUDR, which are to halt deforestation and forest degradation. The guidance sets out expectations around the due diligence associated with proving this condition. This includes examples of the kind of documentation that in-scope entities may gather for this purpose, such as “documents showing contractual obligations”. 

Guidance on composite products

Chapter 9 and Annex II of the guidance provide additional guidance on “composite” products, which are not a formal concept under the regulation but which in practice contain multiple relevant products. A new FAQ (FAQ 1.3) in relation to these composite products outlines that where a composite product contains multiple different relevant commodities or products, due diligence only needs to be conducted on the “main commodity” and derived products relating to the relevant product. The Commission gives the example of a chocolate bar containing cocoa powder, cocoa butter and palm oil. In this example, the due diligence would only have to be done on the cocoa powder and cocoa butter under the commodity cocoa, as this is the relevant commodity listed in the right column of Annex I for the relevant product. 

The role of certifications and third-party verification schemes in risk assessment and risk mitigation

Chapter 10 of the guidance acknowledges that certification and other third-party verified schemes may have a role to play given their potential added value in “providing complementary information, such as on geolocation coordinates, and supporting the operators’ risk assessment”. Businesses should bear in mind certain factors when considering whether to use particular schemes. The lack of independent audits can be a weakness of certain private schemes, for example. Mandatory public verification schemes with binding measures can include higher standards, both in terms of coverage and implementation. 

Businesses should check what specific requirements are covered by each scheme: all applicable elements of their standards “should be in line with (either at the same level, or higher than) the EUDR, in particular regarding the deforestation-free definition, geolocation requirements, and transparency and the legality of production”. For further information, the guidance recommends the Commission’s Impact Assessment, and the EU best practice guidelines for voluntary certification schemes for agricultural products and foodstuffs.

Delay elsewhere? 

In a separate announcement in late September, the Commission stated that it has opened infringement procedures against 17 Member States for failing to notify the Commission of their national measures to transpose the Corporate Sustainability Reporting Directive (CSRD), following the expiry of the deadline in July 2024. The Member States now have two months to respond and complete their CSRD transposition. 

For more information on EUDR, including on how businesses are preparing, please speak to your usual contact at Slaughter and May.

[1] Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023.