EU deforestation regulation (EUDR) proposed delay: What businesses need to know
On 23 September 2025, the European Commission announced its plan to postpone EUDR compliance deadlines by another year, meaning initial compliance will only be required by 30 December 2026. This follows an earlier year-long delay agreed between the EU institutions, to December 2025 for large companies and mid-2026 for smaller companies. This delay is primarily due to serious concerns over the readiness of the central IT system, which is essential to implementing the Regulation. There is also a risk of trade disruption if the system were to fail under the anticipated volume of transactions. While this extension provides businesses with additional time to prepare, it is important to highlight that the core obligations and objectives of the EUDR remain unchanged.
Overview of the EUDR
The EUDR is a core part of the EU’s plan to tackle deforestation - a major driver of biodiversity loss and climate change. It replaces the narrower EU Timber Regulation (EUTR), expanding its scope to cover a broader range of commodities and derived products. The Regulation applies to all businesses placing relevant products on or exporting them from the EU market, regardless of size or volume.
The list of covered commodities includes cattle, coffee, oil palm, rubber, soy, and wood. The Regulation also applies to a wide array of derived products, meaning that compliance obligations may extend beyond the obvious raw materials.
What prompted the latest delay?
The latest postponement follows a detailed assessment by the Commission, which concluded that the central IT system required to manage due diligence statements and compliance data was not yet robust enough to handle the expected volume of transactions. Without a delay, the Commission feared that there was a real risk of system slowdowns or outages, which could have paralysed trade and made compliance impossible for many businesses.
Despite the delay, the obligations under the EUDR are currently unchanged. Businesses are therefore expected to use the additional time to prepare for full compliance. The Commission has also continued to issue supporting guidance over the summer, including a comprehensive guidance document published on 12 August 2025, which addresses common questions and clarifies the scope of the Regulation. In addition, the draft Commission Implementing Regulation of 22 May 2025 lists countries classified as low-risk or high-risk for producing commodities associated with deforestation, as required under the EUDR. This classification will affect the level of due diligence required for products sourced from different countries.
Practical implications for businesses
The EUDR introduces a significant compliance burden, particularly for companies with complex or global supply chains. Businesses must map their entire product portfolio to identify which goods and suppliers fall within the scope of the Regulation, including derived products that may not be immediately obvious. This process requires a detailed understanding of supply chains and the ability to trace products back to their source.
Businesses should also conduct risk assessments to determine whether there is a risk that products are not deforestation-free or legally produced. Where risks are identified, adequate and proportionate mitigation measures must be taken before products can be placed on the market.
The delay provides a crucial window for businesses to address traceability gaps, implement digital compliance tools, and ensure that internal teams and suppliers are fully prepared for the new deadline. Early engagement with suppliers is particularly important, as building the necessary transparency and data collection processes can be time-consuming.
Risks of non-compliance and strategic opportunities
The EUDR includes robust enforcement mechanisms and significant penalties for non-compliance. These include fines of up to 4% of annual EU turnover. In addition to regulatory penalties, non-compliance risks reputational damage, loss of market access, and disruption to business operations.
At the same time, the delay offers a strategic opportunity for businesses to strengthen supply chain resilience, enhance ESG credentials, and align EUDR compliance with broader sustainability and due diligence frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D).
Recommendations and Next Steps
Businesses are advised to closely monitor ongoing regulatory developments as further announcements are expected in this area. Proactive engagement with suppliers is essential to address traceability gaps and ensure readiness for the new deadline. Integrating EUDR compliance into wider business strategies, including procurement, sustainability, and risk management, will help ensure a smooth transition and minimise the risk of disruption.
By taking proactive steps now, companies can not only avoid regulatory pitfalls but also position themselves as leaders in responsible sourcing and sustainability.
Co-authored by Kainat Shah.
