RDUE: Understanding the new European regulation against deforestation and forest degradation

According to the FAO, the world lost 420 million hectares of forest between 1990 and 2020. It is estimated that consumption in the European Union is responsible for around 10% of this deforestation.

The European Union Regulation against Deforestation and Forest Degradation (EUDR) marks a decisive step in the global fight to preserve forests. This ambitious text, which came into force on June 29, 2023, aims to ensure that products marketed or exported from the European Union (EU) do not cause deforestation or forest degradation. It is due to come into force on December 30, 2025 for large companies, and on June 30, 2026 for SMEs.

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What is the link between the RDUE and the RBUE?

Since 2013, the EUWR (European Union Timber Regulation) has required companies to guarantee that the timber and timber products they put on the market are not illegally harvested. With the EUWR, the objective has been broadened to eliminate deforestation and forest degradation. The RDUE also extends its scope to new raw materials: beef, soya, palm oil, cocoa, coffee and rubber, as well as their derivatives.

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What are the objectives of the RDUE?

The European Commission proposed a regulation in November 2021, which was adopted on December 6, 2022, aimed at reducing the EU's impact on global deforestation and ensuring that products purchased by citizens do not contribute to it. The text also aims to affirm the EU's role as a world leader in the fight against deforestation.

The RDUE has two main objectives:

• Minimize the EU's impact on global deforestation, which contributes to around 11% of greenhouse gas emissions and biodiversity loss.
• Promote trade in deforestation-free products, ensuring that European citizens only consume responsibly produced goods.

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Scope of the regulation

RDUE applies to a wide range of products, including :

• Wood products: furniture, paper, coffins, seats, etc.
• Agricultural raw materials: soya, palm oil, cocoa, coffee, beef, rubber.

Companies must provide proof of no deforestation since December 31, 2020, as well as the geolocation of their logging plots.

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Who does RDUE affect?

Two categories of players are targeted by this regulation:

• Operators: any natural or legal person who, in the course of a commercial activity, places timber and timber products on the EU market or exports them from the EU market.
• Traders: any entity in the supply chain other than the operator who, as part of a commercial activity, makes timber and timber products available on the EU market.

SMEs benefit from exemptions from certain obligations (see section 10).

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Obligations imposed by the RDUE

Companies must comply with the following obligations:

Prohibition

It is prohibited to place on the European Union market timber or timber products which :

• have contributed to deforestation or forest degradation,
• come from illegal harvests,
• are not accompanied by a declaration of due diligence.

Due diligence

Operators must apply a due diligence system before marketing or exporting timber and timber products on the European market. They must also pass on this information to downstream players in the supply chain, and publish an annual report on their due diligence actions.

SMEs are exempt from due diligence if their products have already undergone this process, and from the obligation to publish an annual report on their due diligence.

All retailers are required to collect and retain specific information on their suppliers and customers for 5 years, while cooperating with the relevant authorities.

The Due Diligence System must be reviewed once a year.

Traceability obligations

As part of the "diligence raisonnée" process, operators must collect geolocation information for each parcel where the wood for the products concerned has been harvested, as well as the date or period of production. Geolocation corresponds to the GPS coordinates of the plot or its perimeter defined by a polygon.

Declaration of conformity:

Before a product is placed on the market, a declaration must be registered in a centralized system managed by the European Commission.

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Due diligence: a central tool of the EUDR

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Due diligence is based on three key steps:

Information gathering

The information to be collected and retained is similar to that required by the EUGSR, but with a sometimes greater level of detail. In addition, it is also necessary to collect :

• proof of no deforestation or degradation,
• geolocation of production plots and date or period of production.

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‍Risk analysis: assess the prevalence of deforestation in the areas concerned.

The risk assessment takes into account the criteria of the EUGR, as well as the following elements:

• the risk assigned to the country of production by the European Commission (see Country Assessment - Art. 29),
• the presence of forests in the production area,
• the prevalence of deforestation or forest degradation,
• the presence of indigenous peoples,
• consultation and cooperation in good faith with these peoples,
• the existence of legitimate claims by indigenous peoples to land and use rights,
• risks related to corruption or falsification of documents/data,
• the risk of mixing products,
• the conclusions of the European Commission's expert groups,
• and other criteria.

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Risk mitigation:

In the event of significant risk, mitigation procedures may include :

• request additional information or documents,
• independent inspections and audits,
• implementation of other actions based on the information gathered,
• capacity building and investment.

Controls, measures and procedures must be in place before any product is placed on the market.

For large companies (non-SMEs), additional requirements apply:

• appointment of a compliance officer at executive level,
• independent audits to verify the effectiveness of the internal system.

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Customs information systems and procedures

The European Commission is setting up an information system to :

• Register due diligence declarations.
• Verify conformity. This system will be interconnected with customs to ensure that non-compliant products are blocked before they are put on the market or exported.

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How will monitoring, controls and sanctions be applied?

The competent authorities in the Member States will carry out checks based on a risk-based approach:

• Frequency of checks: at least 3% of operators for standard risks, 9% for high risks.
• Penalties: fines of up to 4% of sales, confiscation of products, temporary ban on activity, etc.

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Some specific requirements for VSEs/SMEs

SMEs are defined according to Directive 2013/34/EU:

• Balance sheet total ≤ €20 million.
• Net sales ≤ €40 million.
• Less than 250 employees.

They benefit from certain exemptions:

• No declaration required if products have already undergone due diligence.
• Reduced annual reporting obligations.

The RDUE represents a major step forward in ensuring responsible supply chains. By reducing the EU's contribution to deforestation and promoting deforestation-free products, it is a pillar of Europe's ecological transition.