The European Commission is preparing to provide further clarity on the requirements of the European Union Deforestation Regulation (EUDR). However, organizations do not need to wait to begin their journey toward EUDR compliance.

Here are six steps companies, including FSC certificate and license holders, can take now to prepare for EUDR compliance before December 31, 2024.

FSC is committed to upgrading its system and developing new integrated solutions. This will ensure that all actors throughout the supply chain can confidently meet their EUDR legality and sustainability obligations, as well as other relevant sustainability legislation in Europe and around the world.

STEP 1: Create an inventory list of your covered goods and/or products

The EUDR places obligations on organizations involved in the supply chain of covered commodities and products, including wood, rubber, palm oil, soy, beef, coffee, and/or cocoa. Wood is the only product under the EUDR where harvesting must be legal, free of deforestation, and where the source forest must be free of "forest degradation."

If you are not sure whether a derived product or material is included in the EUDR, selected derived products are outlined in Annex I of the Regulation. For instance, many wood, pulp, and paper products fall within the scope of the EUDR. With regard to rubber, new pneumatic tires are part of the EUDR scope. The full annex is available here.

If it is still unclear whether a product is covered, we recommend assessing each product against the following criteria:

1) Is the product made from one of the covered commodities?

2) Does the product use one of the HS codes listed in Annex 1?

If the answer to both questions is yes, the product is within the scope. If the answer to both questions is no, the product is not within the scope.

If you are FSC certified, we recommend identifying which products are FSC certified and adding both the HS Code and the FSC Product Code for all your products (both FSC certified and non-certified). Since this additional step also covers products not included in your FSC certificate, it will help you identify products that potentially fall under the EUDR.

STEP 2: Review the proposed requirements for FSC's new Regulatory Module

The FSC Regulatory Module is a standard intended for the voluntary use of organizations that have applied for or hold FSC certification to extend their certification scope in order to comply with EUDR Due Diligence obligations.

The FSC Regulatory Module framework and requirements are as follows:

• A due diligence system to support EUDR compliance, including information gathering, risk assessment, and risk mitigation.
• Collection of precise information regarding the origin of products (geographic location and time of production).
• Ensuring that only deforestation-free materials enter the FSC Chain of Custody.

The additional requirements proposed under the FSC Regulatory Module can be contextualized by reviewing the information kit on the module here. You can also find out which module requirements apply to your organization based on user type using the interactive user journey tool, FSC EUDR (fsc-eudr-journey.org) . 

STEP 3: Benchmark your current Due Diligence system against EUDR requirements

The EUDR will require operators (producers) and traders within forest-based supply chains to conduct comprehensive due diligence before placing goods on the EU market.

Due diligence obligations vary according to the risk level, and the European Commission will conduct and publish country-specific risk assessments. If you already have your own Due Diligence system, it will be useful to evaluate it in terms of alignment and gaps against EUDR requirements.

The evaluation should include:

• Collection and transmission of precise product information and supporting evidence, including description, country of production, production date and time range, and geolocation data for production.
• Evidence of Due Diligence actions and mitigation plans for identified risks.
• A report on the steps taken to ensure due diligence, including how you can currently prepare due diligence statements (DDS) for competent authorities verifying the origin and compliance of a product.

For FSC-certified companies, further information regarding DDS obligations under the Regulatory Module will be provided to you.

STEP 4: Undertake collaborative preparation with your supply chain

To fulfill EUDR reporting requirements, your business partners (suppliers) must provide detailed information to your company. You should start communicating early to determine the types of information you will require from them in the coming months, help them understand the implications and value of their efforts, and address their data or information gaps.

Steps:
• Take inventory of existing products containing forest-based materials such as wood, pulp, or rubber.

• Identify potential gaps in the information you need to obtain from suppliers according to EUDR reporting requirements: Origin of raw materials, land location, logging/harvesting time, resource management, and production processes.
• Support your suppliers in obtaining missing information.
• Identify any information that will require additional explanation from suppliers.
• Assess existing risk profiles within your supply chain. Supply chains or currently high-risk markets are likely to remain classified as such once the EU's new risk benchmarking begins. Consider preparing risk mitigation measures accordingly in cooperation with your suppliers.
• If you are an existing FSC certificate holder, encourage all suppliers in your supply chain to obtain FSC certification and the FSC Regulatory Module; this will allow everyone to benefit from the ability to make FSC claims and invoice claims, and to market your materials as deforestation-free once your supply chain is fully verified.

STEP 5: Plan for secure data exchange with trading partners

Meeting EUDR requirements will benefit from robust end-to-end traceability of transactions across relevant supply chains. Trading partners must agree to share transaction details with each other—such as volume, product, origin, land geolocation data, harvest time, and species—to ensure all materials are sourced in accordance with EUDR standards. They must also demonstrate compliance with Free, Prior, and Informed Consent (FPIC) and the special rights granted to Indigenous Peoples as recognized in the UN Declaration on the Rights of Indigenous Peoples.

Evaluate the process and technical platforms you will use with your business partners to share and verify this transaction data.

Among other benefits, FSC is developing a dedicated platform called FSC Blockchain to help facilitate this traceability requirement for certificate holders.

Built on blockchain technology, the platform enables participants to access and share relevant data in a confidential, flexible, and efficient manner to assist with verification, due diligence, and demonstration of compliance with evolving regulations.

FSC Blockchain will allow users to:

• Verify the certification status of suppliers at the point of transaction.
• Generate verified and traceable claims regarding products traded between you and your trading partners.
• Transmit relevant data across the supply chain—such as origin location, harvest time, species, product groups, and other critical information regarding raw materials containing FSC-certified products—while safeguarding the confidentiality of trading partners.

STEP 6: Communicate your intention for EUDR compliance to your certification body

Certification bodies will likely experience a peak audit period later this calendar year as the end of December approaches. Contact your respective certification body promptly to declare your intention to become EUDR compliant and to confirm your plan to use FSC EUDR with tools such as the FSC Regulatory Module and FSC Blockchain.

This communication will help certification bodies forecast demand for EUDR support and potentially schedule your audit within this challenging timeframe.

FSC Certificate Holders can participate in the Early Adopter Program to initiate this process. You can check the upcoming application periods for the program here.

Do not wait for everything to be finalized. Plan for the future and act promptly!

Although more details regarding the EUDR will emerge in the coming months, our current license and certificate holders can embark on a successful compliance process and avoid the tight schedule ahead of the December deadline.

Furthermore, we recommend that businesses not currently holding an FSC certificate learn more information about these solutions, which provide a robust foundation for EUDR compliance.

Source: FSC.ORG