Back to Square One – Update on the Latest EUDR Developments

To Delay or not to Delay – Parliament’s Last-Minute EUDR Amendments Cause Uncertainty

The complexity of the EUDR and its compliance challenges for businesses has caused a debate about its implementation timeline. While the original implementation date of 30 December 2024 (still) stands, the European Commission (“Commission ”) has proposed a delay, subject to approval by the European Parliament (“Parliament”) and the European Council (“Council”), moving the effective date to 30 December 2025 for large companies, and 30 June 2026 for micro and small companies. The Council approved the proposal on 16 October 2024. On 14 November 2024, the Parliament approved the delay, but adopted additional amendments, requiring a “trilogue”, i.e., negotiations between the Council, Parliament, and Commission to reach a final agreement. The Council did not support these amendments (press release) on 20 November 2024, leaving it uncertain what form a compromise will ultimately take. Negotiations will start on 21 November 2024. The final vote is expected to occur probably at the beginning of December. If a consensus is reached, the delay would be confirmed. Otherwise, the EUDR will become applicable on 30 December 2024.

While the outcome of the ongoing discussions between the EU Commission, Council, and Parliament regarding the EUDR delay remains uncertain, an agreement to postpone implementation until 2025 is likely, though finalization may take a few more weeks.

Key Highlights of the Commission Guidance

This delay, if agreed upon, allows companies to bring their practices into line with the EUDR – an opportunity they should seize. In addition, on 2 October 2024, the Commission published a revised set of FAQs and a guidance document to clarify aspects of the EUDR.

This article aims to pick up on this, summarizing the key takeaways from the recently revised EU guidance and complementing our roadmap to EUDR compliance..

The Commission’s guidance document (“Guidance”) is structured into 11 chapters, each focusing on critical aspects of the EUDR, and two annexes. The updated FAQs (“FAQs”, together “EUDR Guidance”) include 40 “new answers” addressing questions posed by global stakeholders, reflecting the diverse concerns and challenges faced by businesses. While these new answers are clearly marked, it is important to note that some existing responses have also been revised, although these updates are not explicitly indicated. Therefore, companies are encouraged to revisit all FAQ responses, including the older ones, to ensure they have the most current information and guidance.

Key highlights of both include: 

• Scope of the EUDR: The EUDR Guidance clarifies the product-specific scope of application.
• Compliance requirements: Detailed explanations are provided on the due diligence obligations for operators and traders, including the necessity of tracing the supply chain back to the country of origin and verifying that products comply with local laws.
• Implementation timeline: The EUDR Guidance outlines the proposed changes to the entry dates, confirming the potential shift to 31 December 2025 for most companies and 30 June 2026 for micro and small enterprises.
• Due diligence framework: It emphasizes the need for robust due diligence processes, including risk assessments and documentation practices that demonstrate compliance with the EUDR.
• Monitoring and reporting: Companies are encouraged to establish systems for ongoing monitoring and reporting to ensure adherence to the regulation and to facilitate transparency.
• Support resources: The EUDR Guidance highlights available resources and tools to aid businesses in understanding and implementing the EUDR, including best practices and examples of successful compliance strategies.
• Stakeholder engagement: Emphasis is placed on the importance of engaging with stakeholders, including suppliers, and local communities, to foster sustainable practices throughout the supply chain.

Spotlight 1: The Scope of the EUDR under the EU's Guidance

The EUDR Guidance further underlines that the structure of the upstream supply chain can determine whether the EUDR is applicable to companies using or processing relevant products in their business. By doing so, it provides valuable guidance and clarity on a cornerstone of the EUDR.

The EUDR sets out rules for three scenarios along different stages of the supply chain, from import into the EU to final delivery to the end consumer after export from the Union market. It applies when a product listed in Annex I to the EUDR, which contains, has been fed with, or has been produced using specified commodities, namely cattle, cocoa, coffee, oil palm, rubber, soya, and wood, is

• placed on the Union market (operator),
• made available on the Union market (trader), and
• exported from the Union (operator) (together “Supply”)

in the course of a commercial activity.

Based on the rather broad wording and previous guidance documents from the EU Commission, there has been a lot of uncertainty as to whether sourcing of relevant products for the use in their own business would trigger EUDR obligations (e.g., sourcing of coffee for the company’s employees or sourcing of in-scope products such as leather from cattle to be processed to products not in scope, such as car seats).

In the new EUDR Guidance, the Commission has clarified that the applicability of the EUDR hinges on the upstream supply chain: 

• If a company purchases a relevant product from a supplier within the EU and uses it only for internal purposes (e.g., coffee purchased for employees) or processes it into a non-relevant product (e.g., a car seat), the company is neither obliged as an operator nor as a trader. Therefore, the EUDR does not apply.
• Conversely, if a company imports a relevant product into the EU from a supplier domiciled in a third country, it is considered an operator (as it is making the relevant product available on the EU market for the first time) and must comply with the EUDR.

Companies importing relevant products from outside the EU can thus be classified as operators and are required to comply with the EUDR even if the product is only used in the own business (e.g., wooden table bought from a non-EU supplier for the employee recreation room). As a result, companies will need to conduct a thorough assessment of their supply chain practices to understand their obligations under the EUDR and may need to reconsider their sourcing strategies. In light of the EUDR Guidance, applying the motto “Buy European” can exclude EUDR obligations and could lead to a significant reduction in obligations.

Overall, this clarification influences how companies navigate and best structure their supply chains in light of EUDR due diligence obligations, emphasizing the importance of understanding the source and intended use of relevant products to determine regulatory obligations.

Spotlight 2: Obligations of a Non-SME Operator in the Downstream Supply Chain

The new EUDR Guidance furthermore clarifies the responsibilities of downstream operators or traders, highlighting their discretion in implementing risk-based EUDR due diligence measures.

As shown, the EUDR imposes obligations on any company involved in placing or exporting relevant products as an operator or in making a product available as a trader as part of a commercial activity. Depending on their role and position in the supply chain, companies must fulfil these duties to ensure accountability throughout the entire supply chain (with certain relief for small and medium-sized enterprises).

However, this framework means that products undergoing processing, trading or exportation can be subject to due diligence obligations multiple times. For example, consider an EU-based manufacturer that sources palm oil – a product covered by the EUDR – from an EU supplier to process this into, e.g., industrial fatty alcohols (also in scope) and place those products on the market. In this example, the EU supplier and the manufacturer would be obliged to conduct EUDR due diligence.

However, the EUDR does not provide for an infinite multiplication of obligations. It allows non-SME operators and traders to verify that due diligence has been properly carried out upstream and to refer to existing due diligence documentation. This means that downstream operators can rely on – rather than duplicate – the due diligence efforts of their suppliers when submitting their due diligence statement while retaining legal responsibility in the event of a breach of the EUDR. To benefit from this option, downstream companies must ascertain that due diligence has been properly carried out.

The FAQs now clarify what it means to “ascertain” due diligence, emphasizing the risk-based discretion that downstream operators have. There are essentially two approaches, which could be combined on a risk-based logic:

1. Systemic Verification: Downstream operators may choose to systematically review every due diligence statement from suppliers. However, the FAQs explicitly indicate that this level of verification may not be necessary.
2. Adequacy and Proportionality Assessment: Alternatively, downstream operators can focus on verifying that their suppliers have an operational and up-to-date due diligence system in place. This includes ensuring that there are adequate and proportionate (i) policies, (ii) controls, and (iii) procedures to mitigate and manage effectively the risks of non-compliance of relevant products, to ensure that due diligence is properly and regularly exercised.

When opting for the second approach, a downstream company could consider and/or rely on the results of an independent audit of the supplier in question verifying the existence and regular use of internal policies, controls, and procedures.

Next Steps 

Considering the chaos due to the Parliament’s last-minute amendments, the uncertain timeline, and the comprehensive and complex EUDR due diligence obligations, the time for action is now, using the EUDR Guidance en route to EUDR compliance.

By leveraging both, companies can strategically adapt their procurement practices and position themselves for success in a rapidly evolving regulatory landscape.

Despite the remaining uncertainty, it appears more likely than not that the suggested delay will eventually be adopted in a timely manner, i.e., that the EUDR will become applicable from 30 December 2025 onwards.

However, companies are well advised to check whether mitigation measures to reduce remaining risks are available and feasible. To answer these and outline a roadmap for navigating the complexities of the regulation effectively, you can refer to our previous publications here and here. In addition, the EUDR Checker supports companies with the first steps to EUDR compliance.

Authored by Christian Ritz, Sebastian Gräler, Felix Werner, and Julia Gingelmaier.