Deforestation regulation as part of corporate sustainability work

The Deforestation Regulation (EUDR) is part of the EU's broader efforts to safeguard biodiversity and mitigate climate change. The objective of the Regulation is to ensure that products placed on the EU market have not caused deforestation and to reduce the EU's contribution to greenhouse gas emissions and biodiversity loss. The expansion of agricultural production, particularly for commodities such as soy, cattle, palm oil, wood, cocoa, rubber and coffee, is the leading cause of global deforestation. As a major consumer of these commodities, the EU has a significant impact on the condition of the world's forests.

How does the EUDR affect corporate sustainability work?

The EUDR introduces concrete obligations for companies relating to the origin of raw materials, risk management and supply chain monitoring. The Regulation requires companies to be able to demonstrate that their products are deforestation-free and legally produced.

This strengthens companies' environmental responsibility and supports long-term objectives such as reducing climate impacts and safeguarding biodiversity. At the same time, the EUDR increases supply chain transparency, helps companies identify risks within their supply chains and develop practices that improve reliability in the marketplace. By complying with EUDR requirements, companies can strengthen their competitive position, particularly from a sustainability perspective.

How are EUDR obligations integrated into companies' other sustainability work?

The EUDR requires companies acting as operators (for example, importers) to establish a due diligence system (DDS) to ensure product compliance. A DDS includes information gathering, risk assessment and risk mitigation. The DDS can be integrated with a company's other sustainability management systems, which may facilitate overall management.

The EUDR requires annual reporting from operators that are large undertakings. Companies that report the required information under the reporting obligations of other EU legislation (for example, the Corporate Sustainability Due Diligence Directive) are not required to report the same information again.

Operators may use the DDS required under the EUDR to support compliance with obligations arising from other relevant EU legislation. For example, a DDS established in accordance with the EUDR may help fulfil certain requirements under the Corporate Sustainability Due Diligence Directive and the Forced Labour Regulation, although the scope and requirements of these legal acts differ from one another.

Using certification schemes to ensure compliance with EUDR requirements

Many companies make use of certification schemes as part of their sustainability work in order to meet specific customer requirements. Certification schemes can also provide significant support for operators when carrying out risk assessments under the EUDR. There are a number of different certification schemes for different products, and their compatibility with EUDR requirements varies. They may provide useful information, for example, on product legality, deforestation-free status and the geographical location of the place of production. However, the operator always remains responsible for exercising due diligence.

When considering the use of a certification scheme to support risk assessment, an operator must assess whether the standards of the scheme correspond to the requirements of the EUDR. Compatibility with the EUDR may be evaluated, for example, from the following perspectives:

the definition of deforestation
product traceability and the availability of geographical coordinates of the place of production;
legality requirements;
the potential mixing of compliant products with products of unknown origin.

For the reliability of certification schemes, it is essential that their standards are at least equivalent to those required under the EUDR. Certification schemes may also be used to support compliance with only certain EUDR requirements. It should also be noted that the independence, transparency and quality assurance methods of certification schemes vary.

The Commission intends to establish a database of certification schemes to support compliance with the EUDR. Operators may make use of this database when exercising due diligence.

The role of certification schemes in ensuring compliance with EUDR requirements is discussed in greater detail in Chapter 10 of the Commission's Guidance document.

Experiences of Finnish companies preparing for the EUDR

Several Finnish companies are already well advanced in their preparations for complying with the requirements of the EUDR and have utilised this as part of their sustainability work.

Read more about companies' experiences in articles published by the Finnish Food Authority. All articles are in Finnish.