The EU Deforestation Regulation (EUDR) places far-reaching requirements on companies that import certain products to the EU, trade with them there or export them from there. The EUDR aims to reduce the EU's contribution to global deforestation and protect biodiversity. It requires companies to meet extensive due diligence obligations and ensure transparent traceability of their supply chains.
Originally planned for 30 December 2024, the EUDR is now only expected to apply from 30 December 2025 for large and medium-sized enterprises and from 30 June 2026 for small and micro-enterprises. The Commission had proposed the postponement in October 2024 due to vehement demands from EU Member States and third countries. As this was happening, the European Parliament had initially called for further changes to the content of the EUDR (creation of a new category within the framework of country benchmarking), but there was no majority in favour of this in the Council. On 3 December 2024, the institutions agreed to (just) postpone the date when the regulation would come into effect without making any changes to the content. For the postponement to enter into force, the agreed text must be approved by both the Parliament and the Council before the end of the year and published in the Official Journal of the EU. The obligations under the EUDR, some of which are completely without precedent, will then be set to apply unchanged by the end of 2025.
Affected products and industries
The regulation covers not only timber products, but all raw materials and products listed in Annex I of the EUDR that are particularly frequently grown on land affected by deforestation. This means that a wide range of industries are affected. These include the timber, furniture, food and automotive industries as well as companies in the chemical and pharmaceutical sectors. The raw materials concerned include:
- Timber and timber products
- Rubber
- Soya and palm oil
- Coffee and cocoa
Comprehensive due diligence obligations for companies and possible sanctions should be kept in mind.
Affected companies must comprehensively review and document their entire supply chains to ensure that they are deforestation-free and always keep the following key due diligence obligations in mind:
- Traceability: Geolocalisation data of the raw material sources must be provided to trace the origin of the products to the exact place of production and to prove that the products have been manufactured without contributing to deforestation.
- Compliance with relevant legislation: Companies must comply with the relevant legislation of the country of production, such as labour rights, human rights protected under international law and land use provisions.
- Risk assessment and risk minimisation: To comply with the provisions, companies must assess potential risks along their supply chains and implement measures to reduce these risks.
- Due diligence statement: Companies must submit a statement in the EU information system that the products that are imported, traded or exported comply with the EUDR. The EU information system is already open for registration and companies should do so to familiarise themselves with the system.
In the event of non-compliance with the EUDR, the products may not be made available on the market. Otherwise, companies risk fines of at least 4 % of their total EU-wide turnover. In addition, there are sanctions such as the confiscation of goods and exclusion from public procurement procedures.
Preparatory measures remain essential
Even though the planned postponement of when the regulation comes into effect is likely to provide some respite, the aim for companies should be to identify the specific obligations under the EUDR and, where applicable, the facilitations provided for by the EUDR, to adapt internal proceedings as quickly as possible and to develop holistic strategies for implementation to avoid fines and other sanctions. This applies not least because the requirements under the EUDR differ significantly in terms of scope and classification from previous regulations or other legal acts relating to supply chain compliance.
To meet the EUDR requirements, we offer industry-agnostic compliance solutions, including through our cooperation with the satellite start-up LiveEO. LiveEO provides deforestation assessments and a technical platform while we provide legal support. This involves us collaborating with our offices and partner law firms around the world to be able to provide our clients with comprehensive advice, for example with regard to the relevant legislation of the country of production.
