EU Commission moves forward with final report on EUDR implementation

The EU Commission has confirmed its position of pursuing the long-awaited landmark EUDR deforestation legislation, as concerns remain over its previous delays and overall reduction in scope, reports Neill Barston.

As Confectionery Production has previously reported, there has been extensive lobbying from centre-right political groups within the European Parliament, as well as players within the sweets and snacks sectors who had argued for pushing back the implementation timeline for the landmark environmental frameworks.

The laws had originally been timetabled to be introduced at the end of 2024, with companies having a full two years preparation for ensuring their compliance – yet following intense discussions at an EU level, this was later pushed back by a year.

A further year’s delay was then agreed, leading many market observers to consider whether the key legislation would be introduced at all, given reports of major concerns surrounding the readiness of IT infrastructure managing the EUDR monitoring, as well as fears from within a number of sectors, including cocoa, palm oil and soy production, that the laws would become a regulatory burden on farmers, who could least afford additional costs.

There had initially been broad cross-sector support for the EU Deforestation Regulations, given the major climate and environmental challenges facing global supply chains.

Climate change context
As the EU Commission observed in its report, the context to the development of the landmark laws, was the fact that the Food and Agriculture Organisation of the United Nations (FAO) estimates that 420 million hectares of forest — an area larger than the European Union — were lost to deforestation between 1990 and 2020.  The cocoa sector had played its part in that figure, including core supplying nations of Ivory Coast and Ghana, which are also subject to major timber industry activity, as well as illegal gold mining that has seen around two thirds of primary forest areas destroyed in the two nations over the past sixty years.

Consequently, the EU Commisison has now finally released its report earlier this month, in which it confirmed that regulatory requirements will in fact be reduced by around 75% under its simplification guidelines. 

The EUDR legislation’s latest report confirms that the laws – which for the first time legally compel companies to demonstrate zero deforestation in their direct supply chains, will come into force on 30th December 2026 for large companies, with no further re-opening of its texts.

For micro and small operators, the entry into application is on 30 June 2027; with obligations radically cut for small businesses, which will no longer need to submit due diligence statements.  Only the first actor downstream will collect a due diligence reference number.

There will also be a  simplified one-off declaration for micro and small primary operators from low-risk countries. It replaces the previous need for due diligence statement submissions in the IT system.

Where the required information is already available in databases set up under EU or Member States legislation, and Member States make available the relevant data in the EUDR IT system, micro and small primary operators are exempted from submitting the simplified declaration.

Notably, the EU has also removed of books, newspapers and printed material from EUDR product scope, though notable concern still remains surrounding the fact of the accuracy of data over supply chains in some sectors, including cocoa, with reports emerging that in some nations, including Ivory Coast, only half of all crop supplies are presently fully traceable.

This would in effect mean a considerable risk of compliance failure, with companies being unable to provide the level of transparency required under the scope of EUDR reporting requirements. 

However, the EU has asserted that its latest report has delivered increased clarity to economic operations, member States, third countries, and other stakeholders, while guaranteeing legal stability and predictability.

According to the EU Commission, it believed that in not opening up the legal texts again, its policy provided a commitment to its sister legal entities, the European Parliament and the Council, in revising the regulations to ensure that they can be delivered.

 As the EU Commission asserted, the collective measures put forward in its report would, in its view, lead to a substantial reduction in administrative burden.

They are expected to reduce annual compliance costs for companies subject to EUDR obligations by about 75%, compared to the original EUDR. It also presents planned trade facilitation tools, such as repositories of legislation of producing countries and certification schemes for commodities under the EUDR, to facilitate risk assessment and due diligence. In addition, the report shows that the EUDR is already contributing to structural changes in global supply chains, with increased investment in traceability and more transparency, thereby supporting more sustainable and competitive production practices.

Furthermore, in parallel, the Commission is updating the Information System to reflect the changes introduced by the revised Regulation and enhance the user friendliness of the system. The updated draft implementing act on the Information System will now be submitted to Member States before its adoption. Main developments will include a simplified declaration form for micro and small primary operators, aligned with the existing due diligence statement format; updated specifications for the automated application interfaces; a contingency plan for unplanned unavailability; and a voluntary grouping feature introduced in response to requests from the business sector.

The Commission is also working closely with Member States to make use of available information from national databases to be directly reflected in the Information System in order to support companies fulfilling their EUDR obligations. This is expected to further reduce the burden on micro and small primary operators.

Jessika Roswall, Commissioner for Environment, Water Resilience and a Competitive Circular Economy, commented on the report.

She said: “The agreement reached by the European Parliament and Council provides the necessary certainty and predictability to businesses, so that they can prepare for the application of the EUDR. I am glad that we managed to swiftly address the capacity issues of the IT system and we will now work on the implementation of the law in the most efficient way possible, so that we can reduce global deforestation.”

Industry reaction

For its part, the EU Sustainable Supply Chains Coalition, which includes key companies and brands in the confectionery sector including Nestle, Barry Callebaut, Aldi, Ferrero and Rainforest Alliance, welcomed the fact it does not appear the EUDR will be amended any further.

In a joint statement, the collective acknowledged that the commission had set its position that there would be no further amendments to the scheme – which are now understood to primarily mainly apply to businesses employing over 500 people, and have reporting terms of three years, rather than the single year under the initial plans put forward.

The statement read: “We do not expect the Commission to decide themselves to reopen the regulation – they’ve made that quite clear – but pressure to do so will be exerted from some companies and trade associations and possibly some member states. It is therefore important to continue to resist any reopening, which would only serve to place all the investments that many companies and producer countries have made in preparing for the EUDR at risk.

The collective continued: “The EUDR as recently amended is not perfect – another proof that constantly changing the legal text does not guarantee resolving all issues.

“But the remaining uncertainties can be addressed through further guidance and FAQs, and through initiatives such as the EUDR Community of Practice which the Coalition and European Forest Institute have established. Coupled with generous support for producer countries, especially smallholder farmers, the EUDR offers the best chance to achieve sustainable and secure supply chains for forest risk commodities. No further amendment is needed.”