New EUDR Regulations 2024: What entrepreneurs need to know to meet EU requirements and avoid penalties?
New EU rules against deforestation – the European Union Deforestation Regulation (EUDR) – will soon come into force. These regulations will bring significant changes for companies trading deforestation-related products in the EU market.
When will the new law go into effect?
The aim is to eliminate goods that contribute to deforestation and forest degradation from the EU market. The requirements will come into force on December 30, 2024 for large and medium-sized businesses and from 30 June 2025 for small and micro businesses.
The requirements apply to products such as coffee, cocoa, soy, oil palm, cattle, rubber and wood, as well as derived products, including chocolate, processed meat, tires and wood products.
How you should prepare for the upcoming changes?
Step one: Check your products
It is crucial to carefully analyze the composition of your products. Determining whether your products are subject to the new EUDR regulations may not only require a complex analysis of raw materials, but also customs codes.
Step two: Implement a due diligence system
If your company markets or exports goods covered by the EUDR, you need to implement a due diligence system. This is a multistage process that includes:
- Stage 1. Information gathering
The first step is to obtain detailed data on the origin and legality of the raw materials. In particular, geo-localization data of the areas from which the raw materials were obtained and documentation of compliance in the country of origin will be important.
- Stage 2. Risk assessment
The enterprise must assess the risk of introducing goods on the market that could contribute to environmental degradation. It is required not only to document the risk analysis, but also the actions taken to reduce this risk.If a higher than negligible level of risk is identified, additional action will be required. The company will need to collect additional evidence, conduct independent audits, and even discontinue some sources of raw materials.
- Stage 3. Due diligence statement
At each stage of trading in goods covered by the EUDR, a due diligence statement will need to be provided to confirm compliance with the requirements of the regulation.
What are the consequences of non-compliance?
It is imperative that organizations comply with the new regulations, as failure to do so may result in significant penalties. These may include financial penalties (up to 4% of annual turnover on the EU market) or confiscation of goods, in addition to a temporary ban on trading EUDR products.
Differences for small and large companies
Larger companies will have to implement advanced procedures to ensure compliance with the EUDR. Meanwhile, smaller businesses can count on some simplification. Nevertheless, all companies, regardless of size, need to adapt their operations to avoid legal and financial risks.
Need support in adapting to the requirements of the new EUDR regulations? Contact us so we will help you prepare for the upcoming changes.