ESRS E4, datapoints 24.d and 38.a, require companies to disclose adopted policies to address deforestation and relevant metrics.
EUDR, the EU Regulation on Deforestation-free Products (EU 2023/1115), introduces obligations relating to the placing or making available on the EU market, and exporting from the EU, of deforestation-related commodities and associated products.
The EU Commission has published a guide to help companies understand the level of due diligence required depending on the type of company, its position in the supply chain (first placing/downstream) and its size.
The document provides an overview of how the obligations apply illustrated through 11 supply chain scenarios.
You will find the document enclosed, and you can also download “EUDR compliance – a guide to understanding your position in beef, cocoa, coffee, palm oil, rubber, soy, and wood supply chains” here: https://data.europa.eu/doi/10.2779/4084343
In December 2024 the EU granted a 12-month additional phasing-in period, making the EUDR law applicable on 30 December 2025 for large and medium companies and 30 June 2026 for micro and small enterprises.
Traceability and transparency are at the heart of the system, to make the sustainability of supply chains a new standard.
⭕ Deforestation
Is defined as the conversion of forest to agricultural use, whether human-induced or not, which includes situations caused by natural disasters.
The assessment of whether the commodity has contributed to deforestation is conducted by looking backwards in time to see if the crop land was a ‘Forest’ at any time since the date specified in the Regulation (31 December 2020).
A forest that has experienced a fire and is then subsequently converted into agricultural land (after the cut-off date) would be considered deforestation under the Regulation.
In this specific case, an operator would be prohibited from sourcing commodities within the scope of the Regulation from that area (but not because of the forest fire).
Conversely, if the affected forest is allowed to regenerate, it would not be deemed deforestation, and an operator could source wood from that forest once it has regrown.
⭕ Forest degradation
Means structural changes to forest cover, taking the form of the conversion of:
🌿 primary forests or naturally regenerating forests into plantation forests or into other wooded land, or
🌿 primary forests into planted forests.
Wood products coming from such converted land cannot be placed on the market or exported.
Sustainable forest management systems can be employed and encouraged, provided they do not lead to a conversion that meets the degradation definition.
⭕ Which products are covered?
Palm oil, cattle, soy, coffee, cocoa, timber, rubber, and products derived from the listed commodities (such as beef, furniture, or chocolate)
See the full list of commodities in Annex I of the Regulation: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R1115&qid=1687867231461#d1e32-243-1
Source: https://green-business.ec.europa.eu/deforestation-regulation-implementation_en
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