Insight Focus
The EU has published EUDR country risk ratings. Most cocoa-producing countries are standard risk, and even low-risk producers still face strict data and traceability rules. Additionally, the EU’s proposed Omnibus package aims to ease compliance by simplifying sustainability laws and cutting business burdens.
EU Publishes EUDR Benchmarking
The European Union Deforestation (EUDR) saga continues with the publication of the producing country risk benchmarking. As outlined in the regulation, the basis for this benchmarking includes an assessment of deforestation and forest degradation rates, agricultural land expansion tied to cocoa and other relevant commodity production, trade trends, and other elements.
The outcome of the exercise was the announcement that, effectively, the high-risk countries are sanctioned nations such as Russia and North Korea, which have nothing to do with the listed parameters related to deforestation.
The standard-risk countries, which represent the vast majority of cocoa-producing countries, are in many cases examples of countries that should be considered high risk if the actual assessment criteria were taken seriously. To name a few: Cameroon, Brazil and the DRC.
In addition, a particularly surprising anomaly is Ghana being rated as low risk—an outcome unlikely to sit well with its neighbour, Ivory Coast, which has been rated as standard risk. Another significant cocoa-producing country in the low-risk category is the Dominican Republic.
The outcome for the industry is that nothing changes for standard-risk origins; the same requirements under the regulation apply as for high-risk origins, with the only difference being a lower percentage of inspections required by the National Competent Authorities (NCA)—from 9% for high risk to 3% for standard risk.
Low-Risk Countries Still Face Compliance Rules
The requirements for low-risk countries are still quite burdensome. A low-risk country is required to:
- Assess the complexity of the supply chain and the risk of circumvention of the EUDR.
- Assess the risk of mixing with products of unknown origin or origin in high- or standard-risk countries.
- Ascertain, to a no or negligible risk level, that production occurred in countries or parts thereof classified as low risk.
- If you get this far, you are no longer required to risk assess or risk mitigate under Articles 10 and 11. Products from low-risk countries also benefit from the lowest rate of annual checks—1% of operators.
Article 9 still requires these countries to collect data demonstrating that the relevant products comply with Article 3 (i.e., that they are deforestation-free and lawfully produced). They must still collect the following information, accompanied by evidence, for each relevant product:
(A) Adequately conclusive and verifiable information that the relevant products are deforestation-free.
(B) Adequately conclusive and verifiable information that the relevant commodities have been produced in accordance with the relevant legislation of the country of production.
The focus on supply chain mixing risk and the legality questionnaires can be slightly simplified to focus on Internal Management Systems (IMS) that demonstrate compliance with laws, rather than IMS-based risk assessments, mitigation measures, or general Free, Prior, and Informed Consent (FPIC) processes.
Low-risk categories are still subject to the requirement to issue due diligence statements when placing the relevant products on the EU market and may also be subject to substantiated concerns.
Calls for Zero-Risk Category and Delay
There have been several attempts from either Member States or groups of MEPs to amend the EUDR to include a “zero-risk” country category. This follows a previous attempt to amend the regulation in December 2024, which proposed a zero-risk category but was rejected during triparty negotiations between the Council, Parliament and Commission.
More recently, during an Agriculture and Fisheries Council meeting, under the “Any Other Business” agenda item, the agriculture representatives of Luxembourg and Austria proposed the introduction of zero-rated countries and a delay to the regulation’s entry into application to accommodate the proposed amendment.
The Commission has indicated that it does not want any further amendments and, at this stage, has stated that it will not accept any delay. Both France and Germany have also made clear that they do not want any further delay in the regulation’s entry into force.
The saga continues!
EU Omnibus Proposal Aims to Ease Compliance Burden
Although not part of the EUDR itself, the EU Omnibus proposal is another legislative initiative reflecting growing concern over the complexity and compliance burdens of EU sustainability rules.
The Omnibus is a proposed package of legislative amendments put forward by the European Commission to simplify and streamline existing sustainability regulations in response to concerns—particularly from small and medium-sized enterprises (SMEs)—about increasing complexity and administrative burdens.
Aimed at boosting the competitiveness of EU companies, the Omnibus seeks to make compliance with sustainability requirements easier, reduce reporting obligations and help businesses advance in sustainability efforts while maintaining alignment with broader climate goals.
The Omnibus proposal encompasses several key areas:
- Sustainability Reporting: The proposal seeks to simplify requirements under the CSRD and potentially reduce the number of companies subject to the directive.
- Sustainability Due Diligence: The proposal aims to streamline due diligence requirements, focusing on direct business partners and potentially reducing the frequency of assessments.
- Carbon Border Adjustment Mechanism (CBAM): The Omnibus includes changes to make CBAM easier for authorities to administer and for importers to comply with—potentially through the introduction of a tonnage threshold and simplified reporting requirements.
- EU Taxonomy: The proposal includes amendments to the EU Taxonomy for sustainable activities, aimed at clarifying the definition of sustainable activities and aligning them with the EU’s climate targets.
- Other Legislative Areas: The Omnibus also addresses areas such as sustainable finance reporting and European investment programmes.
The main changes include removing 80% of companies from the scope of the CSRD to align with the CSDDD, applying only to companies with 1,000 employees and either EUR 50 million in turnover or a EUR 25 million balance sheet.
Additionally, due diligence would be limited to tier-one suppliers, with the assessment frequency reduced from every year to once every five years. There is also a reduction in the burden on SMEs resulting from due diligence information requests by large companies. Additionally, the proposal includes the removal of civil liability and a delay in implementation until mid-2028.
Overall, the EU Omnibus is a comprehensive package of proposals aimed at simplifying sustainability regulations and reducing the regulatory burden on businesses, while maintaining the EU’s commitment to sustainability and climate action. However, the proposed changes have not been well received by the NGO community and are considered to be a greenwashing measure that weakens EU sustainability regulation.
