The EU Deforestation Regulation (EUDR) (Regulation (EU) 2023/1115) is a significant legislative measure aimed at curbing deforestation and forest degradation associated with products entering the EU market. With its enforcement set to begin in December 2025, businesses operating in affected industries must ensure compliance with stringent due diligence requirements. This article provides a comprehensive overview of the EUDR, its scope, compliance obligations, and the implications for companies placing relevant products on the EU market.
Overview of the EU Deforestation Regulation (EUDR)
The EUDR prohibits the introduction of specific commodities and products into the EU market unless they meet the following key criteria:
- They must be deforestation-free, meaning they originate from land that has not been subject to deforestation or forest degradation after 31 December 2020.
- They must be produced in accordance with the legislation of the country of production.
- They must be accompanied by a due diligence statement confirming compliance with EUDR requirements.
This regulation applies to both products placed on the EU market and those exported from the EU.
Relevant Commodities and Products
The EUDR currently applies to a defined list of commodities and products that are known to drive deforestation. These include: Cattle, Cocoa, Coffee, Oil Palm, Rubber, Soya, Wood. For businesses dealing with these commodities, compliance requires rigorous data collection and risk assessment to ensure that only deforestation-free products enter the EU market.
Due Diligence and Traceability Requirements
A core element of the EUDR is its robust due diligence framework, which mandates that businesses undertake the following:
Geolocation of Production Plots: Operators must collect precise geolocation data for all plots of land where relevant commodities and products were produced. This is essential for verifying deforestation-free status.
Supply Chain Transparency: Companies must implement segregated chain-of-custody systems, ensuring that non-compliant goods do not mix with compliant ones. Mass balancing and other tracking mechanisms are not permitted.
Risk Assessment and Mitigation: Businesses must assess the risk of deforestation-linked products entering their supply chain and adopt mitigation strategies where necessary.
Submission of a Due Diligence Statement: A formal declaration must be provided, attesting that the product complies with EUDR regulations.
Compliance Timeline
Originally enacted in June 2023, the EUDR has undergone timeline extensions to provide businesses with adequate preparation time. As per the latest amendment in December 2024, the compliance deadlines are as follows:
- 30 December 2025 – Full compliance required for most businesses.
- 30 June 2026 – Extended compliance deadline for micro and small enterprises.
Applicability and Regulatory Scope
The EUDR differs from other due diligence regulations such as the EU Corporate Sustainability Due Diligence Directive (CSDDD) and Germany’s Supply Chain Act, as it is product-specific rather than entity-specific. The regulation applies to:
- Operators: Businesses placing relevant products on the EU market or exporting them.
- Traders: Entities making relevant products available on the EU market.
Given the broad scope of the EUDR, businesses involved in any stage of the supply chain must carefully evaluate their compliance obligations.
Key Challenges and Business Implications
While the regulation is designed to promote sustainable trade, businesses must navigate several challenges:
- Data Collection and Geolocation Compliance: Ensuring accurate tracking of product origins requires advanced traceability solutions.
- Supply Chain Adjustments: Companies may need to revise sourcing strategies to align with EUDR compliance requirements.
- Potential Regulatory Gaps: Certain assembled products (e.g., leather shoes) are currently not covered, indicating possible future regulatory updates.
It is also worth noting that the Annex I list of relevant products is subject to expansion, meaning businesses should stay informed about potential regulatory changes.
The Road Ahead
Despite lobbying efforts to introduce exemptions and new compliance categories, the EUDR remains on track for enforcement according to the revised timeline. The EU is not expected to introduce additional amendments before the compliance deadlines. Businesses should therefore prioritize:
- Implementing robust due diligence frameworks
- Enhancing traceability and supply chain monitoring
- Engaging with suppliers to ensure alignment with EUDR standards
The EU Deforestation Regulation (EUDR) represents a crucial step toward sustainable and responsible trade. As the compliance deadline approaches, businesses must adopt proactive measures to align with regulatory requirements. By leveraging technology-driven traceability solutions and integrating due diligence best practices, companies can mitigate risks and contribute to the broader goal of deforestation-free supply chains.
