With the EU Deforestation Regulation (EUDR), the European Union has created an instrument to protect forests worldwide and reduce greenhouse gas emissions. The regulation requires companies that import or export certain raw materials and products into or from the EU to demonstrate that their supply chains are free from deforestation. A central element is country benchmarking, which establishes the risk classification for countries and regions of origin.
The classification of country benchmarks into 'low risk', 'standard risk' and 'high risk' determines how stringent the obligations for companies are. Imports from high-risk countries are subject to stricter controls, while a 'low-risk' classification reduces certain due diligence obligations. The Commission publishes these classifications on the basis of objective criteria – but the system is not without criticism.
What is assessed in country benchmarking?
The benchmarks are established by the European Commission for countries and regions, primarily on the basis of:
- The extent of deforestation and forest degradation
- The extent of the expansion of agricultural land
- Production trends for relevant raw materials and products
In addition, further criteria may be taken into account, such as concerns raised by environmental organisations or the rights of indigenous peoples.
What follows from country benchmarking?
Enhanced controls by competent authorities for products from high-risk regions
For relevant products from high-risk countries or regions, the competent authorities are obliged to carry out enhanced controls.
Simplified due diligence obligations for companies
Operators are exempt from fulfilling Articles 10 and 11 of the EUDR – i.e. risk assessment and risk mitigation – when the relevant raw materials originate from a country or region classified as low risk.
However, in order to prove origin from the respective countries, the supply chain must be fully known and documented. In addition, companies must assess the risk that the raw materials do not originate from the stated low-risk country or region.
The information requirements of the due diligence obligation pursuant to Article 9 continue to apply in full, including:
- (g) Conclusive and verifiable information that the relevant products are deforestation-free;
- (h) Conclusive and verifiable information that the production of the relevant raw materials was carried out in accordance with the applicable legislation of the country of production.
Criticism of country benchmarking
The results of the published country benchmarks often have little to do with the actual deforestation risk and appear primarily politically motivated. For example:
Emerging economies with widespread illegal logging (e.g. Republic of Congo, Papua New Guinea) are surprisingly classified as 'low risk' – the same as EU member states such as Germany and France.
Major trading hubs such as China, India and Singapore also received a 'low risk' classification and are therefore subject to reduced controls. Equally, countries with documented governance problems in the forestry sector are treated the same as established states governed by the rule of law.
Where there are indications of deforestation or forest degradation, operators must act even for shipments from 'low-risk countries'. In practice, this means that companies cannot base their due diligence obligations solely on the country classification.
The 'low risk' classification can easily lead to the misconception that the EUDR is irrelevant for such origins. However, the actual challenge remains proving deforestation-freeness, regardless of risk status.
Conclusion
Classifying countries as 'low risk' can reduce the scope of due diligence obligations, but does not exempt companies from the core requirement: demonstrating that raw materials are deforestation-free and legally produced.
Companies should therefore not rely solely on the country benchmarking system, but should establish internal processes and use digital tools to ensure efficient and credible compliance.
Furthermore: if an operator has 'relevant information' or 'reasonable concerns' suggesting that violations of the EUDR may exist despite a 'low risk' classification, the simplified due diligence must be replaced by the full due diligence obligation.