EUDR

The EU Deforestation Regulation (EUDR) categorizes risk levels to determine the likelihood that commodities and products placed on the EU market are linked to deforestation. These risk levels help assess compliance and guide the due diligence process for companies. The EUDR defines three primary risk levels:

1. Low-Risk

• Characteristics: Products and commodities from regions or supply chains that have robust measures in place to prevent deforestation and degradation.
• Criteria: These regions typically have effective laws, regulations, and enforcement mechanisms aimed at preventing deforestation, as well as reliable certification schemes and transparent supply chain practices.
• Due Diligence Requirements: Simplified due diligence process. Companies must still ensure traceability and provide evidence of low-risk status but face fewer reporting and verification requirements compared to high-risk products.

2. Standard-Risk

• Characteristics: Products and commodities from regions or supply chains that do not fit clearly into either low-risk or high-risk categories.
• Criteria: These regions may have some measures in place to address deforestation but are not as robust or reliable as those in low-risk areas. There may be partial compliance with certification schemes or some enforcement issues.

Due Diligence Requirements: Full due diligence process. Companies must conduct a comprehensive assessment, including gathering detailed information about the supply chain, verifying compliance with relevant laws, and ensuring traceability. 3. High-Risk Characteristics: Products and commodities from regions or supply chains with a high likelihood of being linked to deforestation and forest degradation. Criteria: These regions often lack effective deforestation prevention measures, have weak or poorly enforced laws, and may be associated with illegal logging or land conversion. There may be no reliable certification schemes or traceability systems in place. Due Diligence Requirements: Enhanced due diligence process. Companies must conduct rigorous assessments, gather extensive documentation, implement risk mitigation measures, and possibly engage in third-party verification to ensure compliance. Enhanced scrutiny and reporting are required to provide assurance of deforestation-free status. Implementation and Verification Monitoring and Assessment: The European Commission will monitor and assess the deforestation risk levels of different regions and update the classification as needed. Companies must stay informed about any changes to the risk levels of their sourcing regions. Documentation and Evidence: Regardless of the risk level, companies must maintain documentation and evidence to support their due diligence processes and be prepared for potential audits or investigations by relevant authorities. Summary Low-Risk: Simplified due diligence, fewer reporting requirements. Standard-Risk: Full due diligence, comprehensive assessment required. High-Risk: Enhanced due diligence, rigorous assessments, and extensive documentation needed. Understanding these risk levels helps companies tailor their due diligence efforts appropriately, ensuring compliance with the EUDR and contributing to the global fight against deforestation.