Definitions and obligations

Global deforestation means deforestation taking place worldwide (both in the EU and outside) due to the conversion of forest to land for agricultural use, whether human-induced or not (in line with the definition set out in Article 2). 

Deforestation and forest degradation are among the main drivers of climate change and biodiversity loss - the two key global environmental crises of our time.  

The main cause of deforestation and forest degradation worldwide is the expansion of agricultural land for the production of commodities such as soy, beef, palm oil, wood, cocoa, rubber or coffee. As a major economy and consumer of these commodities, the EU is contributing to deforestation and forest degradation worldwide. The EU, therefore, has the responsibility to contribute to ending it. 

By promoting the production and consumption of ‘deforestation-free' commodities and products and reducing the EU's impact on global deforestation and forest degradation, the Regulation is expected to bring down EU-driven greenhouse gas emissions and biodiversity loss. 

As defined in Article 2(15) of the Regulation, an operator is a natural or legal person who places relevant products on the market (incl. via an import) or exports them in the course of commercial activity. 

This definition also covers companies that transform one product of Annex I (which has already been the object of due diligence) into another product of Annex I. For example, if company A, based in the EU, imports cocoa butter (HS code 1804, included in Annex I), and company B, also based in the EU, uses that cocoa butter to produce chocolate (HS code 1806, included in Annex I) and places it on the market, both company A and B would be considered operators under the Regulation. 

Operators placing on the market a product listed in Annex 1 I that has not been subject to due diligence in a prior step of the supply chain are subject to the obligation of filing a due diligence statement. 

A large company that is not an operator and commercialises the products included in Annex 1 on the market, for instance, large supermarket or retail chains, also falls under the scope and must fill in a due diligence statement. 

In line with Article 5(1) of the Regulation, the obligations of large traders are the same as those of large downstream operators: a) they need to file a due diligence statement; b) when doing so, they may rely on the due diligence previously carried out in the supply chain but, in such a case, they are subject to the provisions of Article 4(9); c) they are liable in case of breach of the Regulation, also for a due diligence carried out or a due diligence statement submitted by an upstream operator. 

Relevant commodities and products can only be placed on the EU market if they are deforestation-free and comply with the relevant legislation of the country of production (according to Art. 3 (b), Art. 2 (40) EUDR). 

"Relevant legislation" may include, among others, national laws (including relevant secondary law) and jurisprudence as well as international law as applicable in domestic law. The Regulation presents a non-exhaustive list of legislative areas without specifying particular legal acts, as these differ from country to country and may be subject to amendments.  

Relevant documentation is required for the purposes of the risk assessment, Art. 9 (1) (h), 10 EUDR. Such documentation may, for example, consist of official documents from public authorities, contractual agreements, court decisions or impact assessments and audits carried out. In any case, the operator has to verify that these documents are verifiable and reliable, taking into account the risk of corruption in the country of production.  

The Commission will issue a specific guidance document on legality in due course. 

The Regulation relies on the definition of ‘forest’ of the Food and Agriculture Organization of the United Nations. This includes four billion hectares of forests – the majority of habitable land area not already used by agriculture – which encompasses areas defined as savannahs, wetlands and other valuable ecosystems in national laws. 

If the woody vegetation has or is expected to surpass more than 10% canopy cover of tree species with a height or expected height of 5 m or more, it should be classified as “forest”, based on the FAO definition. E.g. young stands that have not yet but are expected to reach a crown density of 10 percent and tree height of 5 m are included under forest, as are temporarily unstocked areas, whereas the predominant use of the area remains forest. 

Forest degradation under the Regulation means the conversion of certain types of forests into other kinds of forests or other wooded land. Sustainable forest management systems can be employed and encouraged, provided they do not lead to a conversion that meets the degradation definition. 

Conversion for other uses such as urban development or infrastructure does not fall under the deforestation definition. For instance, wood from a forest area that has been legally harvested to build a road would be compliant with the Regulation. 

The "plot of land" – the subject of geolocation under the Regulation – is defined in Article 2 (27) as "land within a single real estate property, as recognised by the law of the country of production, which possesses sufficiently homogeneous conditions to allow an evaluation of the aggregate level of risk of deforestation and forest degradation associated with relevant commodities produced on that land." 

The absence of a land registry or formal title should not prevent the designation of land that is de facto used as a plot of land.  

The information, documents and data that operators and traders that are not SMEs need to collect and keep during 5 years to demonstrate compliance with the Regulation are listed in Article 9 and Annex II as well as in Article 2 (28) as regards data related to geolocation. 

Operators (and traders which are not SMEs) shall exercise due diligence with regard to all relevant products supplied by each particular supplier. Therefore, they shall put in a place a due diligence system, which includes the collection of information, data and documents needed to fulfil the requirements set out in Art. 9; risk assessment measures as described in Art. 10; risk mitigation measures as referred to in Art. 11. The requirements for the establishment and maintenance of due diligence systems, reporting and record keeping are listed in Art. 12. The operators will have to communicate to operators and to traders further down the supply chain all information necessary to demonstrate that due diligence was exercised and that no or only a negligible risk was found. 

Operators and traders further down the supply chain that receive such information may base their own due diligence on the information received, but the fact that another operator or trader further up in the value chain has carried out a due diligence does by no means disapply their own obligations. 

Operators and traders which are not SMEs are required to ensure that the information on traceability that they supply to enforcing authorities in the Member States through the due diligence statement submitted to the Information System is correct.        
The development and functioning of the Information System will be in line with the relevant data protection provisions. In addition, the system will be equipped with security measures, that will ensure the integrity and confidentiality of the information shared. 

The Observatory will built on already existing monitoring tools, including Copernicus products and other publicly or privately available sources, to support the implementation of this Regulation by providing scientific evidence, including land cover maps on the cut-off date, regarding global deforestation and forest degradation and related trade. The use of these maps will not automatically ensure that the conditions of the Regulation are complied with, but will be a tool to help companies to ensure compliance with this Regulation, for example to assess the deforestation risk. Companies will still be obliged to carry out due diligence.

The EU  Observatory on deforestation and forest degradation will cover all forests worldwide, including European forests and will be developed in coherence with other ongoing EU policy developments such as the Forest Monitoring Law and upgrading and enhancement of the Forest Information System for Europe (FISE).

The primary purpose of reference maps produced by the EU Observatory will be to inform the risk assessment by operators/ traders and EU MS Competent Authorities (CAs). As such, reference maps will have the following features:

• They will be non-mandatory. There will be no obligation compelling operators /traders (or CAs) to use the reference maps of EU Observatory to inform their risk assessment
• They will be non-exclusive. Operators and traders (as well as CAs) may avail themselves of other maps that can be more granular or detailed than those made available by the Observatory. The regulation is not prescriptive on the modalities to inform the risk assessment. The Observatory is one of the many tools which will be available, and will be a tool that the Commission will offer free of charge
• They will be non legally binding. Therefore, reference maps may made available by the EU Observatory may be used for risk assessment. However, the fact that geolocation provided falls within an area considered as forest does not automatically lead to conclusions of non-compliance. On the other hand, one should not assume that if geolocation falls outside an area considered as forest the shipment/commodity will not be checked (there can be random checks, and there may be other risk factors) or that the commodity will be automatically compliant (first, due to the absence of 100% accuracy, and second, because a deforestation-free commodity could anyway be illegal)

Article 17 allows Competent Authorities to take immediate actions – including suspension - in situations that present high risk of non-compliance. What constitutes high-risk, and how long can the suspension take place?

Competent authorities may identify situations where relevant products present a high risk of being non-compliant with the requirements of the Regulation on the basis of different circumstances, including on the spot checks, the outcome of their risk analysis in their risk-based plans, or risks identified through the information system, or on the basis of information coming from another competent authority, substantiated concerns etc. In such cases, the competent authorities can introduce interim measures as defined in Article 23, including the suspension of placing or making available the product on the market. This suspension should end within three working days, or 72 hours in case of perishable products. However, the competent authority can come to the conclusion, based on checks carried out in this period of time, that the suspension should be extended by additional periods of three days to establish if the products is compliant with the Regulation.

Operators which are not SMEs will have to publicly report on their due diligence system annually. For those operators that are in the scope of Corporate Sustainability Reporting Directive (CSRD) and comply with EU Sustainability Reporting Standards (ESRS) in due time, is it sufficient to publish their report according to the requirements in CSRD? Or will there be additional reporting requirements?

The Regulation provides that when it comes to reporting obligations, operators falling also within the scope of other EU legislative instruments that lay down requirements regarding value chain due diligence may fulfil their reporting obligations under the Regulation by including the required information when reporting in the context of other EU legislative instruments (Article 12.3).

The Commission is working on guidelines to elaborate on some of the aspects of the Regulation, notably on the definition of “agricultural use”, that will address issues related to agroforestry and agricultural land, certification, legality and on other aspects that are of interest to many stakeholders on the ground. These documents are planned to be published before the entry into application of the Regulation.

The Commission is also gathering inputs and promoting dialogue amongst stakeholders via the Multi-stakeholder platform on Protecting and Restoring the World’s Forests with a view to providing informal guidance on a number of issues. This document on Frequently Asked Questions already answers the most frequent questions received by the Commission from relevant stakeholders and will be updated over time. If needed, additional facilitation tools will be mobilised.

N.B: No additional guidelines are necessary to comply with the rules. The Commission aims to elaborate certain aspects to explain how the Regulation will work in practice, share best practice examples, etc

No. However, the Commission aims to put forward best practice examples, including in guidance documents, which will to some extent cover commodity-specific aspects.

The objectives of the Deforestation Regulation and the Renewable Energy Directive are complementary, as they both address the overarching objective of fighting climate change and biodiversity loss. Commodities and products that fall within the scope of both acts will be subject to requirements for general market access under the EUDR and for being accounted as renewable energy under the Renewable Energy Directive (RED). These requirements are compatible and mutually reinforcing. In the specific case of certification systems for low Indirect Land Use Change (ILUC) according to Commission Regulation (EU) 2019/807 supplementing Directive (EU) 2018/2001, these certification systems may also be used by operators and traders within their due diligence systems to obtain information required by the EUDR to meet some of the traceability and information requirements set out in its Article 9. As with any other certification system, their use is without prejudice to the legal responsibility and obligations under the EUDR for operators and traders to exercise due diligence.