The EU Deforestation Regulation in Sweden

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The EU Deforestation Regulation (EUDR), which replaces the bloc’s Timber Regulation, entered into force in June 2023. The main provisions of the regulation apply from December 30th, 2024. The regulation is intended to stop deforestation and forest degradation associated with a number of specific raw materials and products, primarily agricultural crops and livestock, wood and fibre products, and solid biofuels. The law applies to operators (producers) and traders who place such products on the EU market or export them from the EU.

Under the regulation, companies must apply due diligence when producing products in order to avoid deforestation and forest degradation. This is done by i.e. by collecting geolocation data on raw materials and assessing the risk of deforestation. Companies must also submit due diligence statements to an EU information system where authorities and customers are able to review such information. The system also creates a reference number which can be passed on to customers.

What is happening at the moment?

Despite uncertainty over how the regulation will work in practice, no announcements have yet been made regarding a possible extension to its implementation period. Difficulty in interpreting and implementing the law has led to widespread criticism from affected industries all over the world, with calls for implementation to be postponed and for the flaws in the regulation to be addressed.

European Commission efforts to support implementation are behind schedule and lack a definitive timetable. Awaited support includes a guidance document, a web page with updated questions and answers, a risk assessment of countries’ ability to meet the regulation’s requirements and the information system in which actors must report due diligence statements. According to the Commission, the plan is to have the information system up and running shortly before the regulation comes into effect.

The greatest uncertainty concerns how traceability will work through industrial facilities and what responsibility a customer has if a product has an approved due diligence statement. It is also unclear what information needs to be shared with customers, for example in terms of geolocation data and detailed documentation.

What do affected companies need to do?

The Swedish Forest Industries Federation believes that Swedish companies under the scope of the regulation need to prepare the following measures before the end of this year (assuming no announcement is made regarding an extended implementation period):

  • Comprehensive due diligence system to minimize the risk that raw materials have caused deforestation or forest degradation and ensure that relevant laws in the country of production are followed. The system is likely to overlap with existing certification systems and the EU Timber Regulation. Risk assessment and risk mitigation are not needed for Swedish raw materials if Sweden is classified as a low-risk country.
  • System for submitting a due diligence statement for raw materials well ahead of any harvesting operation.
  • System for submitting a due diligence statement for finished products, including a traceability model linking incoming raw materials to finished products. The Swedish Forest Industries Federation is currently developing proposals for traceability models but is waiting for clarifications from the Commission and comptetent authorities.
  • Systems for saving relevant information. Documentation that the raw material was placed on the market before December 30th, 2024, if it is to be used in products that are placed on the market after the end of the year.
  • Be prepared for review by the Swedish Forestry Agency, which is the competent authority for the EU Deforestation Regulation.

Issues we believe need to be addressed before the Deforestation Regulation can be fully implemented:

  • How will traceability through industries and logistics facilities work? The Swedish Forest Industries Federation is developing a set of practical, easy-to-implement solutions.
  • What information should be sent to customers in addition to reference numbers? Much suggests that geolocation data do not need to be forwarded to customers, and the Commission has communicated this is built into the design of the EU information system where such information can be concealed from the customer.
  • How are liability and sanctions limited to operators who violate the regulation, as well as to the actual volume of uncompliant raw material or product? This is partly decided by the Swedish Forestry Agency in a Swedish context, but this needs further clarification in the Commission’s guidance.
  • Will Sweden be classified as a low-risk country? This is to be decided by the Commission based on an analysis from a consulting company and input from EU member states.
  • What do the assessment criteria for forest degradation look like and what sanctions will apply in Sweden? This is to be defined in the Swedish process of how to adapt Swedish law to the regulation.
  • What constitutes relevant legislation in Sweden and what documentation is required? This is to be defined in the Swedish process of how to adapt Swedish law to the regulation.