EUDR Compliance: Understanding your Company’s Position in Chemistry

This is the third blog in a series exploring the impact of the European Deforestation Regulation across various industries. We kicked the series off with the wood and forestry sector, then we turned to the food and beverage industry, and now it's the turn of the chemicals industry.

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The series follows the release of our updated and comprehensive playbook on the EUDR (EU Deforestation Regulation (EUDR) Playbook: Transitioning to Deforestation-Free Supply Chains). While the playbook provides valuable insights, we recognize that each industry faces unique challenges.

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The regulation covers different commodities, but for companies in the chemical industry, palm oil and rubber products are the most relevant. As two of the widely used products globally, understanding their role under the EUDR is vital for ensuring compliance.

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Due Diligence Requirements

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Under the EUDR, companies must electronically submit due diligence statements to a centralized deforestation registry managed by the European Commission. These submissions are reviewed by both the Commission and national authorities. To support compliance, an online Registry System has been introduced, guiding operators and traders through the process of preparing and submitting their due diligence statements.

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Key Components of a Due Diligence Statement: Each statement must include the following details:

• Information about the operator and the regulated products.
• Details on the country of origin and precise geolocalization of all land plots where raw materials were sourced.
• To minimize redundant submissions, companies can cite previously submitted due diligence statements that already contain the required geolocation details (if applicable).

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Leveraging Existing Due Diligence Statements: Businesses that are not SMEs and deal with products containing regulated materials may refer to due diligence statements already on record. However, they must ensure that the original submission was conducted correctly.

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Consolidating Shipments Under a Single Statement: To simplify compliance, companies may submit a single due diligence statement covering more than one shipment or batch, provided that all products within the submission comply with due diligence requirements.

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Understanding Your Company's Role in the Supply Chain

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Under the EUDR, companies are categorized based on their function in the supply chain:

• Operators: Those responsible for introducing regulated products to the EU market for the first time. They bear the most extensive due diligence obligations, including data collection and risk assessments.
• Traders: Those responsible for buying and selling EUDR-regulated products without being the first to place them on the market. While their compliance requirements are less demanding, they must ensure their suppliers meet EUDR obligations.

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Scenarios

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Scenario 1: Palm Oil Supply Chain

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• A large company imports palm oil (HS 1511) to the EU. As it places the palm oil on the European market for the first time, it's a non-SME upstream operator. As such, it must exercise due diligence and submit a due diligence statement to the EU’s Information System before placing the product on the market.

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• The large company sells the palm oil to a large oilseed processing company (non-SME downstream operator), which uses it to produce oleic acid (HS 3823 12), stearic acid (HS 3823 11), and surfactants (HS 3402). Since surfactants are not a relevant product under Annex I, they are not subject to due diligence obligations. However, stearic acid (HS 3823 11) is subject to the EUDR, so the large oilseed processing company must submit due diligence statements for the stearic acid placed on the EU market. Since the palm oil used to produce stearic acid has already undergone due diligence, the large oilseed processing company can refer to the large company’s earlier due diligence statements by including the relevant reference numbers. 

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• The large oilseed processing company sells the stearic acid (HS 3823 11) to a cosmetics company, which uses it to make cosmetic products (HS 3304) for sale to consumers. Since cosmetics are not a relevant product, the cosmetics company is not required to exercise due diligence for cosmetics. However, if it was importing stearic acid, it would need to exercise full due diligence and include the geolocations of the palm oil used in the stearic acid.

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• The large oilseed processing company also sells surfactants (HS 3402) to cleaning product manufacturers in the EU. Since surfactants are not a relevant product under Annex I, the company doesn’t have to comply.

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‍Scenario 2: Palm Oil Supply Chain (2)

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• A small EU-based chemical processor (SME upstream operator) sources palm oil (HS 1511) from an EU refinery that has already imported and placed it on the EU market. Since the palm oil was already placed on the market, the SME processor is not responsible for conducting due diligence at this stage. The small chemical processor refines the palm oil into two products: palm-based oleochemicals (ex HS 3823) and glycerin (HS 2905). As an SME upstream operator, it is not required to submit a due diligence statement but must ensure its sourcing complies with EUDR requirements.

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• The oleochemicals are sold to a large cosmetics company (non-SME trader), which uses them to formulate skincare products. Since the oleochemicals were already placed on the market, the cosmetics manufacturer must still submit a due diligence statement, referencing the chemical processor’s sourcing information.

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• Meanwhile, the chemical processor sells the glycerin to an industrial adhesives manufacturer, which uses it to produce bio-based adhesives. Since adhesives are not listed under EUDR, the industrial adhesives manufacturer has no obligations. However, if it had imported the glycerin from outside the EU, it would need to submit a due diligence statement for the palm oil’s origin.

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Scenario 3: Domestic Rubber Supply Chain

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• A small EU-based rubber plantation owner (SME upstream operator) signs a contract with a large tire manufacturer to supply raw latex (HS 4001). By transferring ownership of the latex after collection, the plantation owner is the first to place natural rubber on the EU market. Under the agreement, the tire manufacturer is authorized to submit the required due diligence statement in the EU’s Information System on the plantation owner’s behalf. However, the plantation owner must still ensure that the rubber complies with EUDR requirements.
• The large tire manufacturer processes the raw latex into rubber compounds and manufactures pneumatic tires (HS 4011). Some of these tires are exported outside the EU, while others are sold within the EU to a vehicle distribution company. Because the tire manufacturer introduces rubber-based products to the EU market and exports them, it must submit two due diligence statements. However, since the raw latex was already verified for compliance, the manufacturer can reference the original due diligence statement.

• The vehicle distribution company (non-SME trader) purchases the tires from the tire manufacturer and sells them within the EU. Although the rubber has already undergone due diligence, the vehicle distributor must still submit a due diligence statement, confirming that compliance checks were carried out earlier. To do so, it can reference the tire manufacturer’s statement but must verify that all regulatory requirements have been met.

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Leveraging Technology for Compliance

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As businesses work to meet the EUDR requirements, adopting digital solutions is essential to streamline data collection, verification, and reporting. Recognizing this need, Finboot and OpenAtlas have partnered to introduce an integrated solution designed specifically for EUDR compliance. This collaboration combines MARCO Track & Trace, a no-code/low-code blockchain platform, with OpenAtlas’ VANTAGE-X, an advanced remote sensing technology.

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How the partnership works:

1. Geolocalization & Satellite Monitoring: OpenAtlas’ VANTAGE-X provides verified geospatial data on commodity origins, enabling businesses to track crops and ensure deforestation-free sourcing.
2. Blockchain-Powered Traceability: MARCO Track & Trace secures and validates this data, creating an immutable chain of custody that aligns with regulatory standards.

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MARCO Track & Trace for EUDR compliance:

• Instantly verify supplier certification status at the transaction level, ensuring compliance with EUDR standards.
• Generate auditable records of transactions between companies and their trading partners.
• Exchange critical data points—including geolocation, harvest timing, species, and product groups—across supply chains.

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Additionally, the platform enhances interoperability by integrating data across multiple regulatory frameworks, including CBAM and ESPR. This ensures businesses can efficiently manage compliance requirements across jurisdictions.

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Conclusion

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Although full EUDR enforcement may seem distant, preparing for compliance is a time-intensive process, so the time to get ready is now. Many businesses underestimate the challenges involved, but making early adoption of digital tools crucial.

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By identifying your company’s position within the supply chain and leveraging the right technology solutions, you can confidently meet regulatory requirements while fostering a more responsible chemical industry.

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Need Guidance? Let’s Talk!

Our team is here to support you through every step of the EUDR compliance journey. If you have any questions or would like to discuss how our solution can help, reach out—we’d be happy to schedule a meeting.

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Extra Resource: Not sure if you’re on track for EUDR compliance? Our EUDR Playbook includes a checklist of key actions your business should already be taking. Download it now to ensure you’re fully prepared!

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