The DD-system is an operator’s “risk management system”. By maintaining it, the operator ensures that products purchased and placed on the market are in compliance with the EUDR’s obligations.
The system consists of three elements: information procurement, risk assessment, and risk mitigation. More detailed information about the content of the DD-system is available in Chapter 2, Articles 8–13 of the EUDR. The information collected must be retained for five years.
Collecting information
When maintaining appropriate due diligence, operators must collection information to verify the origin of products, including:
- Product description and quantity;
- The country of production and, where relevant, parts thereof;
- The geolocation of all plots of land where the relevant commodities and products were produced (geolocation requirements); and
- Adequately conclusive and verifiable information that the relevant products are deforestation-free.
Risk assessment and mitigation
Operators must conduct a risk assessment based on the information collected. The purpose of the risk assessment is to establish whether there is a risk that the relevant products are non-compliant with the EUDR’s requirements.
The risk assessment must take into account the following:
- The risk level and the prevalence of deforestation or forest degradation, the presence of indigenous peoples, the level of corruption and the complexity of the product supply chain in the country of production.
- If the risk assessment concludes that there is a high risk, it must be reduced before products are placed on the market or exported.
- If the measures taken cannot reduce the risk to a sufficient level (no risk or only a negligible risk), products CANNOT be placed on the market or exported.
Risk categorisation of countries of origin
The requirements set for the DD-system includes the risk categorisation of origin. If the European Commission has set a low risk level for origin, the simplified DD-system will apply. In this case, no risk assessment or mitigation will be required. As a rule, all origins have been classified at the level of an average risk (as of 5/2024). The European Commission will separately indicate any changes in the risk level.