9 October 2024
Breaking down CSRD requirements
- Greenwashing
Industries using leather, wood, and rubber are reshaping supply chains to align with EU deforestation-free standards
The EU Deforestation-Free Regulation (EUDR) aims to tackle deforestation by regulating the import and export of certain commodities associated with forest loss into the EU market. Introduced as part of the EU Green Deal, the EUDR requires companies to ensure their supply chains do not contribute to deforestation. Although its initial scope is focused on commodities such as wood, leather, soy, and palm oil, industries like textiles and fashion must assess the indirect risks posed by their sourcing of specific raw materials.
The EUDR, adopted in December 2022 and set to be fully enforced by December 2024, applies to specific commodities that are linked to deforestation. The targeted commodities include soy, palm oil, beef, coffee, cocoa, wood, and rubber, as well as certain products derived from these raw materials. For SME´s and micro enterprises the EUDR will come into place on June 30, 2025 with a simplified Due-diligence procedure.
However, ready-made garments and shoes are not directly impacted by the EUDR, as the customs tariff numbers for these products are not listed in the regulation’s annex. This is a significant clarification, meaning that while many raw materials used in the textile and footwear industries may be subject to EUDR requirements, the finished products themselves are not.
For businesses handling materials covered by the EUDR, the regulation mandates a due-diligence process to ensure the commodities they use do not contribute to deforestation. These requirements include:
Although finished garments and shoes are exempt from the EUDR, companies sourcing wood-based fibres, leather, or rubber must still be aware of the regulation, and help their suppliers to meet the requirements for those raw materials. Therefore, while the final products may be excluded, the responsibility to track and trace the materials remains relevant.
Related products and goods may not be placed, made available or exported on the EU market unless they are:
The EUDR applies to any company, large or small, that places relevant commodities on the EU market. This includes:
You can ask yourself – “Am I the end-user or am I a trader or operator (importer, exporter or producer)?” As a trader and operator you need to ensure that the products fulfill the requirements of the EUDR.
Textile and footwear brands that use wood-based fibres (e.g., viscose, modal), leather, or natural rubber should be vigilant, even if their final products — garments and shoes — are not directly regulated. Sourcing compliance for these materials is still important for avoiding legal risks.
Textile and fashion companies can prepare for the EUDR by focusing on the sourcing of specific raw materials, even if their final products are not directly included. Key steps include:
One of the critical requirements of the EUDR is the use of geo-location data for commodities like wood, leather, and rubber. Companies need to provide precise geographic data for the origin of these materials to demonstrate compliance.
For textile companies using wood-based fibres or leather, it is essential to ensure that suppliers can offer the required geo-location data to verify that the materials are sourced from deforestation-free regions, even if the finished products are not listed in the EUDR annex.
Certification plays a vital role in demonstrating compliance with the EUDR. Companies sourcing wood, leather, or rubber should look for certification schemes such as the Forest Stewardship Council (FSC) for wood-based materials or recognised certifications for sustainable leather.
However, certification alone may not be sufficient, as the EUDR also requires companies to provide geo-location data and conduct risk assessments. Certification is an important tool but must be part of a broader compliance strategy.
While the exclusion of ready-made garments and shoes may seem like a relief for fashion brands, the use of raw materials like leather and wood still presents challenges:
Cosh! offers practical solutions for businesses navigating the EUDR’s requirements. Through supply chain transparency tools, risk assessment frameworks, and geo-location tracking, Cosh! helps companies monitor and verify the origin of materials like wood, leather, and rubber, ensuring they comply with the EUDR.
Their services include:
While ready-made garments and shoes are not directly covered by the EU Deforestation-free Regulation, companies using materials like wood-based fibres, leather, and natural rubber must still consider the regulation’s requirements. Compliance will be necessary for these raw materials to ensure they are deforestation-free.
Textile and fashion companies must be proactive in assessing their supply chains, ensuring traceability, and working with certified suppliers. By doing so, they can meet the EUDR’s sustainability requirements, avoid legal risks, and position themselves as leaders in responsible sourcing.
Although the EUDR is about to enter into force at the end of this year, the German government is currently calling for a postponement of around 6 months. Important implementation elements and the prerequisites for efficient national application are still missing. It remains to be seen whether the EUDR will be postponed or whether a transitional solution will be proposed.