The EU Deforestation Regulation (EUDR), effective as of June 2023, is the EU’s first major legislative effort to combat deforestation. This regulation prohibits products linked to deforestation or forest degradation from entering the European market, making it essential for companies to review their supply chains to ensure compliance. Here’s a guide to help businesses prepare and meet these new requirements.
The EUDR comes into effect for larger companies on December 31, 2024, and for small and medium enterprises (SMEs) on June 30, 2025. However, a proposal from the European Commission may delay these dates by 12 months, which would extend the deadline for larger companies to December 2025 and for SMEs to June 2026. Regardless, businesses are encouraged to begin preparations as soon as possible to minimize any impact on their operations.
The regulation is designed to reduce global deforestation linked to European imports. To comply, companies must ensure that relevant commodities and products are:
The EUDR initially applies to seven key commodities: cattle, cocoa, coffee, oil palm, rubber, soya, and wood, along with products derived from these. Companies are advised to refer to Annex I of the EUDR for a full list of regulated items, which may expand in future updates.
The EUDR applies to operators who place products on the EU market and traders who facilitate their availability. Indirect suppliers may also need to provide information to support compliance efforts.
Non-SME operators and traders are required to implement a due diligence system to gather, verify, and document information proving EUDR compliance. This includes:
Additionally, risk assessments will be conducted for supply chains based on criteria such as complexity, involvement of indigenous communities, and country risk classification (high, standard, or low).
If there is more than a negligible risk of non-compliance, companies must implement risk mitigation procedures, which may involve additional documentation, audits, or independent surveys. Companies should review these procedures annually to ensure alignment with EUDR standards.
Member states will establish penalties, which may include fines up to 4% of annual EU turnover, confiscation of products, exclusion from public funding, and temporary prohibition from the market.
In taking these steps, companies will be better equipped to align with the EUDR and support the EU’s environmental goals, fostering responsible trade practices and contributing to global deforestation reduction.