A few weeks ago, we wrote about growing calls for a “fleet of omnibuses” – a holistic approach to simplifying EU due diligence requirements that takes into account sector-specific laws pertaining to deforestation, conflict minerals and batteries alongside pending simplification of the Corporate Sustainability Due Diligence Directive (see this post).
The European Commission appears to be answering those calls, at least in part. Yesterday, the Commission published new guidance documents intended to simplify and reduce the administrative burden of complying with the EU Deforestation Regulation. The EUDR is slated to apply starting at year-end. This is a one-year delay from the original end of 2024 timetable.
Adopted in 2023, the goal of the EU Deforestation Regulation is to ensure that specified commodities and goods in the EU market do not contribute to deforestation and forest degradation in the EU and globally. The due diligence and other requirements of the Regulation are discussed in detail in our earlier Alert here. Calls to push back the EUDR built over the course of 2024 (see this post), driven by what are perceived by many as unduly onerous and unworkable compliance requirements that will have a significant impact on global trade.
The updated guidance and Frequently Asked Questions published yesterday by the Commission are characterized as providing companies, EU Member States' authorities and partner countries with additional simplified measures and clarifications on how to demonstrate that products are deforestation-free and to ensure harmonized implementation of the Regulation across the EU. The new guidance documents introduce the following simplification measures (among others), which will reduce the number of due diligence statements that companies need to file:
- Companies will be allowed to submit due diligence statements annually, instead of for every shipment or batch placed on the EU market.
- Large companies will be able to reuse due diligence statements when goods previously on the EU market are reimported.
- An authorized representative will be able to submit due diligence statements on behalf of members of company groups.
- Clarification of “ascertaining” that due diligence has been carried out is provided. Large companies downstream will benefit from simplified obligations from their suppliers, by only needing to collect due diligence statement reference numbers and use those references for their own due diligence statement submissions.
The Commission also published a draft delegated act for public consultation yesterday. The consultation is open until May 13. The delegated act provides further clarifications and simplification regarding the scope of the EUDR, to address stakeholder requests for guidance on specific categories of products. The Delegated Regulation proposes to amend Annex I of the EUDR to introduce targeted and limited technical fixes to the list of relevant products, by clarifying the range of products not covered by the Regulation. These changes are intended to provide for simpler and more straightforward application of the EUDR and greater legal certainty, as well as to reduce friction at the EU’s external borders by providing more clarity on which products are in/out of scope of the EUDR.
Finally, in yesterday’s announcement, the Commission reiterated that it is finalizing the required country benchmarking system. That will be done through an implementing act to be adopted by June 30.
According to the Commission, these measures will in the aggregate result in an estimated 30% reduction in administrative costs and burden for companies.
