The implementation date for the EU Deforestation Regulation (EUDR) is fast approaching – it is the 30th December 2024.

The EUDR is a non-tariff barrier imposed by the EU that impacts certain commodities mainly produced by developing and middle-income nations. Commodities targeted include palm oil, rubber, timber, cocoa and others. The EUDR will cause a financial and technical burden on Malaysian companies, especially smallholders. It is possible that some could be excluded completely from EU supply chains simply because EUDR requirements are too onerous and burdensome.

Malaysia has an important ace up its sleeve: the Malaysian Sustainable Palm Oil (MSPO). MSPO aligns with EUDR requirements, as confirmed by a recent Analysis by the European certification expert Pierre Bois d’Enghien.

MSPO can therefore be used as a tool for EUDR compliance by companies – and should be accepted by the EU Commission as a formally recognised compliance standard.  

The MSPO certification has established itself as the global gold standard for palm oil sustainability and assurance. It is also a mandatory system, meaning it covers all sectors in the supply chain; including both smallholders and large plantations.

As exporters in Malaysia and around the world prepare for the EUDR implementation deadline, some key facts demonstrate how MSPO is a solution for EUDR compliance:

  • FACT: The EU has stated that certification systems that use mass balance (MB) won’t be acceptable for EU compliance. This is because there is no traceability under MB systems. However, the EU has also stated that “Certification schemes can be used by supply chain members to help their risk assessment to the extent the certification covers the information needed to comply with their obligations under the Regulation.”
  • In the case of MSPO, certification can be used to meet these requirements because it provides the basic EUDR requirements – legality, geolocation, and a zero-deforestation requirement – as part of its audit.
  • In addition, the MSPO Trace module provides the ability to trace MSPO-certified material through the supply chain.
  • FACT: MSPO is an assurance of compliance with all Malaysian laws and regulations. MSPO’s criteria, indicators and audit guidelines cover an array of legality requirements that are appropriate for the Malaysian context.
  • The EU has not yet released any clear and definitive guidance on what will be covered by the legality requirements of the EUDR. This issue has been raised by Malaysia and numerous other countries directly with the EU in bilateral consultations and international forums such as the WTO.
  • The EU has said it will “soon” release guidance on legality that will “elaborate on some of the aspects of the Regulation, notably on the definition of “agricultural use”, that will address issues related to agroforestry and agricultural land, certification, legality and on other aspects that are of interest to many stakeholders on the ground.”
  • However, given the robustness of the MSPO standard and its standard development processes, it is clear that MSPO can be a compliance tool for Malaysian exporters in relation to EUDR.
  • FACT: The EU Commission has already pointed out that its own forest maps aren’t accurate and should only be used as a guide, and that satellite data are only one possible tool that might be used. The key to compliance is the geolocation data and traceability data above all else. 
  • MSPO is a conclusive and verifiable tool for geolocation and traceability data. To verify this data that are a part of MSPO certification, MSPO follows international requirements for standardisation, accreditation and certification that ensure the information provided in its certifications is conclusive.
  • MSPO requires that its auditors can only be accredited by Standards Malaysia if those auditors meet certain international standards for auditors and are qualified and experienced in undertaking MSPO audits.
  • In other words, MSPO certification is a conclusive and third-party verified source of information on the material coming from Malaysian palm oil producers.
  • FACT: MSPO was revised in 2022. The consultation processes included local environmental and social NGOs as well as trade union groups such as: WWF Malaysia, Sustainable Development Network Malaysia (SUSDEN Malaysia), Sabah Environmental Protection Association, Malaysian Nature Society, Malaysian Trade Union Congress, National Union of Plantation Workers and Society for Rights of Indigenous People of Sarawak.
  • Some of the clear outcomes from these consultation processes include provisions for:
  • High Conservation Value (HCV)
    • Assessments in the standard
    • Social Impact Assessment (SIA) in the standard
    • Strict adherence to labour requirements
  • MSPO adheres to Malaysian labour laws and regulations, as well as international standards and norms for labour, specifically those of the International Labor Organisation. This is in line with government policy.
  • FACT: MSPO is a compliance tool for EUDR. The EUDR will not (at this stage) ‘greenlight’ any certification systems for EUDR compliance, meaning that all certifications are on an equal footing in the eyes of the EUDR.
  • The key requirements for the EUDR are that commodities produced are legal, aren’t produced on land that was deforested after 2020, and that they can be traced back to their source via geolocation. As stated above, MSPO is capable of meeting these requirements.
  • Additional assurances beyond these requirements in a standard – such as requirements on conservation — do not mean that the standard is ‘better’ for EUDR compliance.
  • However, because MSPO is a national, mandatory standard that applies to all participants in the Malaysian supply chain from the plantations the processors, it sets a gold standard for certification.
  • As a national standard, it has the full backing of Malaysia’s national standards organisation, the Department of Standards Malaysia (DSM).
  • Unlike many other voluntary standards, MSPO follows all the requirements of the International Organisation for Standardisation (ISO) and the International Accreditation Forum (IAF).
  • This means that every element of the standard — from its development to auditing processes — follows international best practice. And it can therefore be considered robust, verifiable and conclusive when it comes to meeting the requirements of the EUDR.
Learn More About How the MSPO Fares with the EUDR