The EU Deforestation Regulation (EUDR) is a landmark environmental law designed to combat global deforestation and forest degradation. It introduces strict compliance requirements for companies that place or export certain high-risk products on the EU market.
As deforestation is a major driver of climate change and biodiversity loss, EUDR is a key part of the EU’s sustainability strategy.
It is particularly relevant to companies involved in agriculture, food, forestry, retail, and global supply chains. Understanding and preparing for EUDR is now essential for legal compliance, supply chain management, and ESG alignment.
What Is the EU Deforestation Regulation (EUDR)?
The EUDR is a legally binding regulation that aims to ensure products associated with deforestation and forest degradation are not traded within or exported from the EU.
Legal Definition and Objectives
The EU Deforestation Regulation (EUDR), officially known as Regulation (EU) 2023/1115, entered into force on 29 June 2023. Its application is scheduled to begin on 30 December 2025 for most companies, with a later deadline of 30 June 2026 for micro and small enterprises. These updated timelines reflect a 12-month postponement proposed by the European Commission in October 2024 in response to stakeholder concerns.
The EUDR is a legally binding regulation aimed at stopping products associated with deforestation and forest degradation from entering or exiting the EU market. It represents a key element of the EU’s broader environmental, climate, and sustainability goals.
The regulation’s primary objectives are:
- To prevent deforestation and forest degradation linked to EU trade.
- To promote the trade of deforestation-free products.
- To support climate action and biodiversity preservation.
- To ensure respect for indigenous and human rights in production areas.
These objectives reflect the EU’s intention to drive systemic change in how commodities are produced, sourced, and verified globally.
Key Principles of the Regulation
Three core conditions must be met before a product can be placed on or exported from the EU market:
- It must be deforestation-free, meaning it was produced on land that has not been subject to deforestation or forest degradation after the cut-off date of 31 December 2020.
- It must be legally produced in accordance with all applicable laws in the country of origin, including land use rights, environmental protection, labor rights, and indigenous peoples’ rights.
- It must be covered by a due diligence statement, submitted through a centralized EU information system prior to market access or export.
These conditions apply uniformly to both imported and EU-produced goods, ensuring a level playing field for all businesses regardless of origin. The regulation does not allow for market entry if any of the three conditions are not met, even in cases where products meet local standards but fail to align with the EU’s stricter environmental and legal criteria.
The aim is not only to prevent deforestation, but also to increase accountability and transparency in global supply chains by enforcing legal compliance and environmental responsibility across all operators.
Who Must Comply With the EUDR?
The EUDR defines clear and binding obligations for all businesses involved in the placing, trading, or exporting of relevant products on the EU market. This includes both companies operating within the EU and those based outside the EU but exporting into it.
Operators and Traders
Operators are legal or natural persons who place regulated products on the EU market for the first time or export them from the EU. This includes manufacturers, importers, or producers of relevant goods.
Traders are businesses that further distribute these products within the EU but do not import or export them directly.
Both operators and large traders are required to establish and maintain a due diligence system that meets the legal requirements of the EUDR. They must submit a due diligence statement through a dedicated EU information system prior to placing products on the market or exporting them. This statement confirms that the product is deforestation-free, legal under the country of origin’s laws, and supported by a risk assessment.
Failure to perform due diligence or to submit the required statement can result in serious legal and financial consequences.
SMEs and Extended Deadlines
The EUDR provides transitional flexibility for small and micro enterprises (SMEs), acknowledging their limited resources:
- SMEs have an extended deadline for compliance — until 30 June 2026, reflecting the approved 12-month postponement.
- SME traders are not required to conduct due diligence themselves but must ensure that their suppliers, typically larger operators have done so and provided all necessary documentation.
However, this does not exempt them from responsibility. All actors in the supply chain are legally accountable for ensuring that products meet EUDR requirements, regardless of company size. SMEs should therefore carefully vet their suppliers and maintain documentation to demonstrate compliance if requested by authorities.
What Products and Commodities Fall Under EUDR?
The regulation targets a defined set of high-risk commodities closely linked to global deforestation and forest degradation. It applies not only to raw materials but also to all products that contain, are fed with, or are made using these commodities – regardless of whether they are imported or produced within the EU.
List of Relevant Commodities
As of now, the EUDR covers seven key commodities:
- Cattle: including beef, leather, and related goods. Cattle ranching is a major driver of deforestation in regions like the Amazon.
- Cocoa: used in chocolate and confectionery products. Cocoa cultivation has contributed to significant forest loss in West Africa.
- Coffee: widely consumed worldwide, coffee farming often leads to forest conversion, particularly in Latin America and Southeast Asia.
- Oil palm: found in processed foods, cosmetics, and biofuels. Palm oil production is a major cause of deforestation in Indonesia and Malaysia.
- Rubber: used in tires, footwear, and industrial goods. Rubber plantations have replaced natural forests in Southeast Asia.
- Soya: used for animal feed, processed foods, and biofuels. Soya farming has contributed to forest clearance, especially in Brazil and Argentina.
- Wood: includes timber, furniture, pulp, and paper. Unsustainable logging practices are a long-standing contributor to forest loss worldwide.
Each of these commodities was selected based on its scale of trade with the EU and its direct link to deforestation. Additional commodities may be added in future revisions, depending on risk assessments and market trends.
Covered Products and Annex I
Annex I of the EUDR defines the specific products affected, using EU customs classification codes. These include raw commodities like soybeans and palm oil, as well as derived products such as chocolate, leather, wood furniture, paper, and rubber tires. The list is based on the EU’s Combined Nomenclature (CN) codes, which businesses can verify through TARIC or national customs classification tools. If a product’s code is not listed in Annex I, it falls outside the scope of the regulation.
Exemptions and Special Cases
The EUDR exempts recycled products, packaging that is used exclusively to support or carry other goods, and items at the end of their lifecycle. However, if such materials are sold as independent products and contain any of the regulated commodities, they may still fall under the scope of the regulation.
What Is Due Diligence Under EUDR?
Due diligence is the core compliance mechanism under the EUDR. It involves collecting, verifying, and assessing risk information.
Due Diligence Requirements
Before placing a product on the market, operators and traders must:
- Collect detailed product and supply chain information.
- Identify the country and exact geolocation of production.
- Verify compliance with local laws and confirm deforestation-free status.
- Submit a due diligence statement to the EU register.
- Retain documentation for five years.
The process must be carried out for each relevant product batch.
Risk Assessment Process
A thorough risk assessment must consider multiple factors, including:
- The country of production and its classification as high-, standard-, or low-risk.
- The presence of indigenous communities in or near the production area.
- The complexity and transparency of the supply chain.
- The credibility and completeness of the documentation provided by suppliers.
These factors help determine whether the risk of deforestation or legal non-compliance is negligible or if mitigation measures are required before market placement.
Risk Mitigation Measures
If the risk is not negligible, companies must take appropriate action before placing products on the market. This may include collecting additional documentation, commissioning independent audits, or working with suppliers to implement improvements.
Risk mitigation must be documented and reviewed annually.
How to Prepare for EUDR Compliance?
Compliance with the EUDR is both complex and time-sensitive, requiring companies to adopt a proactive, structured approach. Early preparation is essential not only to meet legal deadlines, but to avoid disruptions, build resilient systems, and demonstrate commitment to sustainability goals.
Internal Steps and Team Setup
Companies should:
- Form a dedicated compliance team that includes legal, procurement, and sustainability leads to ensure cross-functional coordination.
- Review product portfolios to identify which goods fall under the scope of the regulation based on Annex I.
- Update internal policies and supplier contracts to incorporate EUDR due diligence and traceability requirements.
This preparation phase should also include assigning clear roles and responsibilities across departments, backed by executive-level support to ensure resource allocation and accountability.
Data Collection and Traceability
Successful compliance depends on building supply chain visibility and traceability to the plot level. Businesses should:
- Implement or upgrade IT systems that support structured data collection, storage, and risk documentation.
- Use geolocation tools and satellite imagery to trace the origin of commodities, ensuring production took place on non-deforested land.
- Ensure system interoperability with the EU’s central register for submitting due diligence statements.
These investments reduce the risk of non-compliance and can create long-term efficiencies in ESG reporting and supplier management.
Supplier Engagement
Suppliers are at the frontline of compliance, especially in countries with limited infrastructure or legal alignment with EU standards. Companies should:
- Request documentation from suppliers confirming product origin, legality, and deforestation-free status.
- Provide training and resources to help suppliers understand EUDR requirements and build internal capacity.
- Conduct audits or verification checks in high-risk regions, particularly where smallholders or intermediaries are involved.
Proactive supplier engagement strengthens trust, increases data reliability, and helps businesses adapt to future environmental or human rights due diligence rules.
Enforcement, Penalties and Legal Risk
The EUDR includes a robust enforcement framework designed to ensure meaningful compliance and discourage violations across the EU market. Enforcement is decentralized: each Member State is responsible for implementing and overseeing the regulation within its jurisdiction. The European Commission, meanwhile, provides coordination, publishes risk classifications, and may launch infringement proceedings if national authorities fail to act.
Supervisory Authorities and Inspections
EU Member States are required to designate competent authorities to monitor compliance and investigate potential breaches. These authorities play a critical role in ensuring the regulation is applied consistently and fairly across all sectors.
Their responsibilities include:
- Monitoring compliance through both routine and risk-based inspections.
- Reviewing submitted due diligence statements and verifying supporting evidence.
- Conducting audits of operators’ and traders’ due diligence systems.
- Investigating third-party complaints, known as “justified concerns,” which can be submitted by civil society organizations, journalists, or affected communities.
Authorities are empowered to carry out on-site inspections, request additional documentation, and access geolocation data and supply chain records. In cases of suspected non-compliance, they may seize goods, halt shipments, or suspend business activities related to the products in question. Member States must also publish annual reports on enforcement activity, including the number of checks conducted and outcomes of investigations, to support transparency and accountability.
Sanctions and Consequences
Penalties for non-compliance under the EUDR are designed to be proportionate and dissuasive. They target both the financial and operational aspects of violators’ businesses. Member States are required to enforce the regulation through national legal frameworks, with sanctions that may include:
- Fines of up to 4% of the company’s total annual EU turnover.
- Confiscation of relevant products or the revenues generated from their sale.
- Exclusion from access to public procurement contracts or public funding for up to 12 months.
- Temporary prohibition on placing or making available any relevant products on the EU market.
In addition to these penalties, the European Commission will publish the names of companies found in violation, along with details of the breach. This public disclosure can result in reputational damage and reduced stakeholder trust.
Challenges and Practical Considerations
While the EUDR is well-intentioned, implementing it presents real-world challenges for companies.
Technical and Operational Barriers
Many companies face practical difficulties in implementing EUDR compliance systems, especially in complex global supply chains.
Common challenges include:
- Limited or unreliable access to geolocation data for agricultural plots, particularly in regions without digitized land registries or satellite infrastructure. For example, smallholder farmers in West Africa may lack GPS mapping or documented land titles.
- Supply chain fragmentation, where products pass through multiple intermediaries, makes it hard to track origin. A single coffee product might involve dozens of farms, processors, and exporters, each with varying record-keeping standards.
- Existing IT systems may not support traceability at the batch or plot level, requiring costly upgrades or new tools.
These technical and operational issues often delay due diligence efforts and increase compliance costs, especially for smaller companies or those operating in high-risk countries.
Legal and Strategic Considerations
EUDR compliance also brings legal and strategic challenges, especially for companies sourcing from outside the EU.
One major concern is the potential conflict between EU due diligence standards and local laws in producer countries. For instance, in Brazil or Indonesia, legal deforestation may be permitted under national regulations, while still non-compliant with the EUDR’s stricter definition of “deforestation-free” (cut-off date: 31 December 2020).
This creates friction where:
- Suppliers operate lawfully in their own country but fall short of EU environmental criteria.
- Exporters must choose between maintaining EU market access or supporting domestic policies.
Businesses must carefully assess these legal discrepancies and develop sourcing strategies that minimize risk. This may include engaging local authorities, working with NGOs, or supporting jurisdictional approaches to align regional practices with EUDR expectations.
Supporting Businesses in EUDR Compliance
EUDR.co helps businesses turn complex regulatory challenges into streamlined, manageable workflows. As the EU Deforestation Regulation introduces strict traceability and due diligence requirements, the company offers a digital-first solution that simplifies every step — from geolocation verification and supplier data collection to automated Due Diligence Statement submissions. The platform is designed to ensure that companies of all sizes can meet EUDR requirements with confidence, efficiency, and audit-readiness.
EUDR.co understands that compliance is not just about checking boxes — it’s about building trust, reducing risk, and protecting long-term business value. Its tools integrate seamlessly with existing systems, support multilingual supply chains, and adapt to real-world sourcing complexity. Whether a company is preparing its first DDS or scaling compliance across thousands of farms, eudr.co provides the support and infrastructure needed to achieve legally sourced, deforestation-free trade.
Conclusion
The EU Deforestation Regulation marks a major shift in how businesses must manage their global supply chains. It sets strict legal expectations to ensure that only deforestation-free, legally sourced products reach the EU market. For companies, EUDR is not just an environmental requirement, it is a business imperative.
By acting now, companies can reduce legal risks, protect their reputation, and align with rising expectations from regulators, investors, and customers. While the compliance process may be complex, it also presents an opportunity to build stronger, more sustainable supply chains and contribute to meaningful global impact.
FAQ
1. What is the main goal of the EU Deforestation Regulation?
The EUDR aims to stop products linked to deforestation and forest degradation from being placed or exported through the EU, supporting climate and biodiversity goals.
2. Who must comply with EUDR?
Operators and traders who deal with relevant products in the EU market regardless of where they are based, must follow the regulation’s requirements.
3. What products are covered by the EUDR?
The regulation applies to seven key commodities linked to deforestation: cattle, cocoa, coffee, oil palm, rubber, soya, and wood. It also includes a wide range of derived products, such as chocolate, furniture, leather, paper, and rubber-based goods like tires. Only products listed by customs code in Annex I of the regulation are considered in-scope, so businesses must cross-check their goods using official EU customs classification resources.
4. What happens if a company fails to comply?
Non-compliance can lead to severe penalties including fines up to 4% of EU turnover, product confiscation, and exclusion from EU funding or contracts.
5. What is a due diligence statement?
It’s a formal declaration submitted by companies confirming their product is deforestation-free, legally produced, and that required checks have been performed.
6. Are small companies treated differently?
Yes. SMEs have delayed deadlines and simplified obligations but must still ensure the products they sell meet EUDR standards.
7. How should companies prepare?
To prepare for EUDR compliance, companies should start by reviewing their product lines and identifying which items fall within the regulation’s scope. They must engage with suppliers to obtain geolocation and legal compliance data, update contracts to reflect EUDR expectations, and implement internal systems for traceability and documentation. Forming cross-functional teams, investing in digital tools, and building supply chain transparency early on are essential for reducing compliance risks and avoiding disruptions. Early action also positions companies as sustainability leaders in their sectors.