Understanding the new EU Deforestation Regulation: Key insights for businesses

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Whether you're already working on sustainability initiatives or just beginning your journey, understanding this regulation offers valuable opportunities to strengthen your supply chains and enhance your environmental credentials.

The EU Deforestation Regulation introduces important changes to how forest-linked commodities can be traded with the world's largest single market.

This gives an opportunity to align operations with growing consumer demand for sustainable products while streamlining your existing sustainability practices.

In this article, we will guide you with everything you need to know about EUDR compliance, from implementation timelines to practical steps for adapting your supply chain due diligence processes, ensuring your business can continue to thrive in the EU market.

What is EUDR and why is it transforming global supply chains? 

The European Union Deforestation Regulation (EUDR) is a legislative measure adopted by the EU to prevent the import and export of products linked to deforestation and forest degradation.

Replacing the EU Timber Regulation (EUTR), the EUDR extends its scope beyond timber to include a range of commodities that are often associated with deforestation.

The regulation mandates that companies placing these products on the EU market must conduct strict due diligence to ensure their goods are deforestation-free and produced legally in accordance with the country of origin’s laws.

Read also 👉 Our complete guide to EU Climate Regulations

Exact scopes of EUDR: Which business and supply chains are affected

Companies within and outside of EU

The EUDR applies to all operators and traders who place or make available the specified commodities on the EU market, regardless of whether they are based within the EU or outside.

This means that both EU-based companies and foreign companies exporting to the EU must comply with the regulation’s requirements.

Affected commodities and products

The regulation targets a specific list of commodities and their derived products known to contribute significantly to deforestation:

• Cattle (including beef and leather)
• Cocoa
• Coffee
• Oil Palm (including palm oil)
• Soy
• Wood
• Rubber
• Maise

Products derived from these commodities, such as chocolate (from cocoa), furniture (from wood), and biofuels (from palm oil and soy), are also within the regulation’s scope.

The list may be expanded in the future to include other commodities as necessary.

Exact timeline: Key dates for export planning

Entry into force

The EUDR was officially published in the EU’s Official Journal and entered into force in June 2023. This marks the beginning of the transition period for companies to adjust their operations and supply chains to meet the new requirements.

Enforcement date

Enforcement for EUDR has been officially postponed from 2025 to 2026 as per the parliamentary vote before the winter holidays. This means operators will have one more year to try to prepare for EUDR.

Mastering EUDR due diligence: How to meet EUDR requirements?

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Complying with the EUDR involves a series of strategic steps to ensure your products meet the regulation’s stringent criteria.

1. Assess whether your products are within scope

Review your product portfolio to determine if any of your products contain the listed commodities or their derivatives. This assessment is crucial to understand the extent of your obligations under the EUDR.

2. Map your supply chain

Develop a comprehensive map of your supply chain for the in-scope products. This includes identifying all suppliers, intermediaries, and the origin of the commodities. Supply chain transparency is essential for effective due diligence.

3. Conduct risk assessments

Evaluate the risk of deforestation and illegality in your supply chains. Consider factors such as the country of origin, the prevalence of deforestation, and governance indicators. High-risk supplies will require more stringent due diligence measures.

4. Conduct high-level due diligence on social and environmental safeguards

Ensure that your suppliers comply with social and environmental laws of the country of origin, including land-use rights, labor rights, and environmental protection regulations. Document evidence of compliance and any measures taken to address identified risks.

5. Implement traceability and monitoring systems

Establish systems to trace the commodities back to the plot of land where they were produced. Utilise technologies such as satellite monitoring, blockchain, or supply chain management software to enhance traceability and monitoring.

6. Update contracts and agreements

Revise your contracts with suppliers to include clauses that require compliance with the EUDR. Ensure that agreements mandate the provision of necessary information and allow for audits and inspections as part of your due diligence process.

7. Engage with suppliers

Work collaboratively with your suppliers to communicate the new requirements. Provide training and support to help them understand and meet the EUDR obligations. Building strong relationships can facilitate smoother compliance efforts.

8. Prepare due diligence statements with auditors

Develop a detailed due diligence statement that outlines the steps taken to ensure compliance. Engage external auditors to verify the information and processes. This statement must be submitted to the relevant EU authorities as part of the compliance process.

9. Monitor and review constantly

Establish ongoing monitoring and review mechanisms to ensure continued compliance. Regularly update risk assessments, adjust due diligence processes as necessary, and stay informed about any regulatory changes or updates.

Impact beyond EUDR compliance

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Adapting to the EUDR offers valuable opportunities to enhance your company's sustainability profile and operational efficiency:

Smooth EU market Access: Ensuring compliance maintains your access to the EU market, which is crucial for businesses relying on EU consumers.

Strengthened brand reputation: Demonstrating a commitment to preventing deforestation can enhance your brand’s reputation and appeal to environmentally conscious consumers.

More resilient supply chains: Greater transparency and monitoring can lead to more resilient supply chains, reducing the risk of disruptions due to environmental or legal issues.

Enhanced investor relations: Aligning with sustainability regulations can make your company more attractive to investors who prioritise environmental, social, and governance (ESG) criteria.

Why start now?

Supply chain mapping takes time

Supply chains for commodities like cocoa, coffee, and soy often involve multiple tiers of suppliers. Starting your mapping process early allows for a more thorough and less rushed approach.

Supplier relationship benefits from early conversations

Open communication with suppliers about sustainability expectations builds stronger partnerships. Early engagement allows for collaborative solutions that work for everyone.

Proactive preparation supports business continuity

Early adaptation reduces last-minute challenges that could affect your EU market access. A measured, well-planned approach helps ensure your business operations continue smoothly through the transition.