Due Diligence Under the EUDR

Master EUDR due diligence requirements with this step-by-step guide to risk assessment, mitigation, and compliance obligations.

Enhance your understanding of EUDR due diligence with a comprehensive guide to risk assessment, mitigation, and compliance, set against the backdrop of lush rainforest ecosystems.

The EU Regulation on Deforestation-Free Products (EUDR) imposes stringent due diligence requirements on businesses placing relevant commodities on the EU market. Compliance professionals, importers, and exporters must establish robust due diligence systems to ensure that commodities such as soy, palm oil, beef, coffee, and timber are free from deforestation.

Compliance is no longer optional—it's a necessity.

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Key Questions Covered in This Blog:

• What are the due diligence obligations under the EUDR?

• How can businesses collect and verify geolocation data?

• What constitutes a proper risk assessment?

• How can mitigation measures be effectively implemented?

• What simplified requirements exist for low-risk areas?

• Can a corporate group handle due diligence on behalf of subsidiaries?

• What role do customs procedures and documentation play in EUDR compliance?

• Are certification schemes sufficient for compliance?

• What are the record-keeping requirements for businesses?

“Due diligence under the EUDR is not just about ticking boxes—it’s about safeguarding global forests and ensuring sustainable trade.”—Arne Mielken, Managing Director, Customs Manager Ltd.

Abbreviations Used in This Blog:

• EUDR – EU Regulation on Deforestation-Free Products

• EU – European Union

• DD – Due Diligence

• IS – Information System (for due diligence submissions)

• SMEs – Small and Medium-Sized Enterprises

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What Are the Due Diligence Obligations Under the EUDR?

Under Articles 9-11 of the EUDR, businesses must establish a Due Diligence System comprising three key steps:

1. Information Collection: Gather essential details such as product quantity, supplier data, country of production, and geolocation coordinates of production land.

2. Risk Assessment: Assess the likelihood of non-compliant products entering the supply chain.

3. Mitigation Measures: Implement necessary measures to reduce risks to a negligible level.

How Can Businesses Collect and Verify Geolocation Data?

Operators must collect precise geolocation data (latitude and longitude) to demonstrate the deforestation-free status of sourced commodities. The EU’s Information System requires this data to be linked to due diligence statements.

What Constitutes a Proper Risk Assessment?

Risk assessment under Article 10 involves evaluating non-compliance risks by analyzing factors such as:

• Deforestation risk in the sourcing region

• Supplier track record and due diligence history

• Certification and verification schemes

How Can Mitigation Measures Be Effectively Implemented?

Where risk is identified, Article 11 requires mitigation measures such as:

• Switching to low-risk suppliers

• Implementing independent audits

• Strengthening contractual compliance obligations

What Simplified Requirements Exist for Low-Risk Areas?

Commodities from low-risk areas qualify for simplified due diligence. While basic information collection remains mandatory, detailed risk assessments and mitigation are waived unless new risks emerge.

Can a Corporate Group Handle Due Diligence on Behalf of Subsidiaries?

No. Due diligence responsibility lies with the operator or trader placing the product on the market. Internal corporate arrangements are not covered under the EUDR.

What Role Do Customs Procedures and Documentation Play in EUDR Compliance?

• Products re-imported into the EU under ‘release for free circulation’ must comply with due diligence obligations.

• Customs warehousing and temporary admission are exempt from EUDR due diligence.

Are Certification Schemes Sufficient for Compliance?

Certification schemes assist in risk assessment but do not replace due diligence. Operators and traders (except SMEs) remain fully responsible for compliance.

What Are the Record-Keeping Requirements for Businesses?

Operators must retain all due diligence documentation for five years, including:

• Collected geolocation data

• Risk assessment reports

• Mitigation actions taken

Arne’s Takeaway

Navigating the EUDR’s due diligence requirements may seem daunting, but a structured, step-by-step approach ensures compliance. Proper data collection, thorough risk assessments, and effective mitigation measures are essential for seamless trade under the new regulations.

Expert Recommendations

• Act Now: Start geolocation data collection before enforcement begins.

• Invest in Compliance Tools: Leverage digital solutions for risk analysis and monitoring.

• Seek Expert Guidance: Consult with trade compliance specialists for tailored strategies.

Disclaimer

This article is for educational purposes only and does not constitute legal advice. Consult a professional for specific compliance guidance.

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