A Practical Guide to EUDR Legal Due Diligence

Despite being called the EU’s regulation on deforestation-free products (EUDR), the regulation isn't just about deforestation. Deforestation-free commodities and products must also come with a Due Diligence Statement and proof that they were produced in line with the relevant legislation in the country of production. This aspect of legality has left many in the industry feeling overwhelmed and unsure where to begin. Unlike deforestation checks, for which we’ve made a lot of progress through alignment, legal compliance is a bit trickier to navigate. Building on the latest guidance from the European Commission, here's what you need to know. 

Start with Understanding the Laws 

The first step is knowing what laws apply in the countries where you're sourcing products. This is the basis for determining whether the commodity or product was produced legally in the eyes of EUDR. In its October 2024 guidance, the European Commission elaborated on the key categories of law to consider. These include land use rights, environmental protection, forest rules, third-party rights (such as those of local communities and indigenous peoples), labour rights, human rights under international law, and the principle of Free, Prior and Informed Consent (FPIC). You also need to consider tax, anti-corruption, trade, and customs regulations. 

However, the EUDR doesn't list specific laws because these vary from country to country. Thankfully, several resources can help you understand the laws that apply. TRACT has researched and summarized the key legislation for major producing countries. Other valuable resources include country-specific adaptations of certification schemes, industry associations, and initiatives from the European Forest Institute and Preferred by Nature. Additionally, global databases from the International Labour Organization (ILO), which focuses on labour and human rights laws, and the Food and Agriculture Organization (FAO), which covers a broader set of laws related to agriculture are also highly useful. 

Collecting the Right Information 

Once you've identified the relevant laws, the next step is gathering documents and data. What information should you look for? It depends! So, let’s break it down.  

At the farm level, geospatial data can help you assess any encroachment into legally protected areas or lands designated for indigenous people or local communities. Other documents that demonstrate action in line with the law can also be valuable evidence. This may be at the farm level – like land permits – or it may be at the jurisdictional or supply chain level – like contracts or agreements with indigenous peoples, judicial decisions, or management plans that detail steps of following the laws. 

For complex laws, such as labour rights, it can be hard to prove compliance using paperwork alone. In these cases, evidence that your company has processes and safeguards in place is helpful and in line with other EU regulation like the Corporate Sustainability Due Diligence Directive (CSDDD). Example documents might include grievance mechanism records, company policies, codes of conduct, or audit reports.  

Data, rather than documents, including those from Voluntary Sustainability Schemes (VSS) like third-party certifications can also help here, as many cover EUDR legality requirements and offer assurance through external audits. 

Whatever your documentation may be, TRACT streamlines this process by allowing you to upload, organize and link this evidence to your supply chain with an easy framework. This helps you ensure completeness and makes it easy and quick to retrieve evidence when customers or authorities ask. 

Assessing and Mitigating Risk   

After gathering your documents, you’ll need to assess the risk of non-compliance with the EUDR’s legality requirements. This involves evaluating the reliability of the documents and checking for inconsistencies or signs of falsification.  

Metrics like Transparency International’s Corruption Perceptions Index and the country-commodity specific human rights risk scores on TRACT help you assess risk. If risks are high, documents may merit further verification or risk mitigation. Setting up mitigation action plans or reinforcing farmer support programs to address risk areas are good ways to mitigate not only risk of EUDR non-compliance but also manage the broader business risks tied to illegality and human rights issues.  

All about the Process 

As with any legal matter, there is a lot of room for debate, interpretation and evolution. No one can say for certain how much evidence will be considered “sufficient” to demonstrate compliance with EUDR. What we do know is that effective due diligence involves having a process to identify, assess, and address risks. Setting up a company process to examine the legal aspects of EUDR and their connection to your sourcing area is the fundamental ask of the regulation. Having a solid process in place allows you to begin now, build trust with authorities and customers, and implement improvements as the regulation nears.

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