Compliance with the EUDR requires comprehensive documentation that proves products are sourced deforestation-free and meet regulatory standards.
In this article, we outline the critical documents and processes needed, ensuring that all required information is systematically captured to align with EUDR regulations.
While proper documentation is essential, companies must also ensure that their contracts with suppliers are structured to enforce EUDR compliance. This is why in the following sections, we’ll look at how businesses can legally bind suppliers to these obligations through robust contractual clauses.
Mandatory Product Description and Evidence
Under the EUDR, companies are obligated to document key details about their products to ensure compliance. This includes specifying:
- Product Description: Trade name, type of product, and scientific names of wood species, if applicable, to provide traceability (Article 9, EUDR). Additionally, companies must collect geolocation data to provide precise coordinates of production areas, which is crucial to verifying deforestation-free sourcing.
- Supporting Documents:some text
- Invoices: Detailed records of all transactions to verify product identity and traceability.
- Contracts: Legal agreements that outline the responsibilities of suppliers and ensure awareness of EUDR obligations.
- Certifications: Compliance documents like forest certifications that confirm sustainable sourcing. It is important to note that certifications complement risk assessments but do not replace them, ensuring robust compliance with EUDR requirements.
Read also: EUDR Delay: Why the EUDR Compliance Postponement Is the Perfect Time to Act
Evidence of Quantity and Country of Origin
For EUDR compliance, companies must provide verifiable information about both the quantity of products and their country of origin. This is crucial to demonstrate traceability and compliance with deforestation-free sourcing practices.
- Key documents to collect include:some text
- Tax Receipts: Proof of transaction authenticity that supports traceability.
- Shipping Documents: These track product movements, providing visibility along the supply chain. These documents should also include detailed geolocation data to demonstrate compliance with deforestation-free sourcing.
- Customs Forms: Documentation that verifies product entry or export, including quantities and country of origin details.
What is more, ensuring that all due diligence documents are integrated into broader supply chain management systems helps facilitate traceability and rapid access during audits. Automation of these systems is encouraged to reduce human error and improve responsiveness during regulatory checks.
Retention Requirement: All documentation must be retained for a minimum of five years to ensure traceability and provide evidence during inspections. This also includes maintaining comprehensive geographic and legal data, which should be accessible during regulatory inspections.
Read also: A Comprehensive Guide to Mastering EUDR Geolocation Data Collection
Due Diligence regarding legality
The EUDR mandates that all operators ensure compliance with the relevant legislation of the country of production as part of their due diligence obligations.
This includes adherence to national/regional laws as well as international law covering environmental protection, land use rights, forest management, labor conditions, indigenous peoples' rights, and anti-corruption measures.
Operators must gather and verify documentation, such as valid administrative permits, land tenure agreements, and compliance records, to confirm the legality of production.
The verification process must address risks such as weak governance or corruption in the country of origin. All information must be analysed and verified, meaning operators must be able to evaluate the content and reliability of the documents they collect and to understand the links between the different information in different documents.
Contracts with Suppliers: Legal Considerations
One of the best practices is to structure contracts with suppliers in a way that ensures they meet the regulation’s strict standards. These contracts should contain specific clauses that clearly outline the supplier’s legal obligations:
Key contractual considerations include:
- Compliance Clauses: Suppliers must guarantee adherence to EUDR standards, ensuring that all commodities are deforestation-free. This includes the obligation to provide verifiable geolocation data that confirms the exact origin of the raw materials.
- Audit Cooperation: Clauses requiring suppliers to cooperate fully with audits, providing necessary information to verify compliance. Contracts should also specify that suppliers must allow third-party verification audits, especially in high-risk regions.
- Termination Conditions: Provisions for terminating agreements if a supplier fails to comply with EUDR requirements.
- Third-Party Verification: Where possible, contracts should include requirements for suppliers to obtain independent third-party verification of their compliance, adding an extra layer of assurance. This helps mitigate risks in complex supply chains by ensuring external oversight of compliance measures.
Even with well-structured contracts, companies must remain vigilant of the legal risks and penalties for non-compliance with the EUDR. The following section will explore these potential consequences and how to avoid them.
Read also: Achieving EUDR Compliance: A Guide to Deforestation Data Sources
EUDR Compliance with TradeAware and CMS
TradeAware is a robust solution that aids businesses in achieving EUDR compliance. The collaboration between LiveEO and CMS delivers an all-encompassing approach to regulatory challenges by combining legal insights from CMS with LiveEO's advanced technology.
Introduction to CMS
CMS is a top-tier global legal firm with significant experience in environmental laws, including EUDR. With a team spanning over 100 professionals in various countries, CMS provides comprehensive support to businesses navigating the complexities of compliance. Their expertise lies in preparing companies for the demanding standards of the EUDR.
Key Services of CMS:
- Supplier Checks: CMS assesses suppliers for EUDR compliance through documentation reviews and risk categorization.
- Legal Training: CMS offers educational resources, including webinars and tailored training sessions, to simplify compliance processes.
- Compliance Advisory: CMS provides strategic advice to adapt existing systems to meet EUDR requirements.
- Due Diligence Implementation: CMS assists businesses in creating due diligence frameworks that adhere to EUDR standards.
Through this collaboration, businesses adhering to EUDR regulations with TradeAware enjoy the advantages of:
- Geospatial Monitoring: Real-time geospatial data from LiveEO ensures deforestation-free compliance.
- Legal Compliance Layer: CMS strengthens TradeAware with legal reviews, covering all aspects of due diligence and compliance verification.
- Streamlined Compliance Process: The platform supports geolocation uploads, supplier documentation, and the creation of compliance-ready due diligence statements.
CMS and LiveEO provide a complete solution, enabling companies to address both the operational and legal aspects of EUDR compliance effectively. Contact us today to learn how TradeAware can transform your EUDR compliance.
This article is Part 3 of the series. Be sure to explore the other articles for a complete understanding of the EUDR and how to ensure your supply chain meets its stringent standards.
