EU Deforestation Regulation: what does it mean for your company?

The essence of the regulation is clear: products based on cattle, palm oil, soy, cocoa, coffee, rubber, and wood – and their derivatives – may only be traded under two conditions:

1. They come from land that has not been deforested or ecologically degraded since 31 December 2020, and
2. They are produced in compliance with the legislation of the country of origin.

The rules apply to all companies producing, importing, or exporting such products within the EU. The deadlines are:

• 30 december 2025 for large and medium-sized enterprises
• 30 juni 2026 for micro and small enterprises, provided they already existed before the end of 2020 and remained small

Market operators are companies placing a product on the European market for the first time, such as importers or producers. They carry the greatest responsibility. For each consignment, they must follow a due diligence process:

1. Collecting information: including supplier data, production periods, legal evidence, and the exact geo-coordinates of production plots.

2. Risk analysis and mitigation: checking whether there is a risk of deforestation or illegal production and actively mitigating this risk.

3. Declaration requirement: submitting an official Due Diligence Statement in the central EU system (TRACES NT), declaring that the risk is negligible. Each submission generates a unique reference number, which must be shared with customs and also with buyers of the product. Without this statement, the product may not enter the market.

Not only operators but also traders have obligations:

• Large traders must, just like operators, submit their own due diligence statement. They may rely on their suppliers’ statements but must always submit their own with the correct reference numbers.

• Small and medium-sized traders (SMEs) face lighter obligations. They do not need to submit their own statement but must keep the upstream due diligence reference numbers for five years and show from whom they bought and to whom they sold.

In this way, everyone contributes: large players take active responsibility, while smaller companies mainly ensure transparency and traceability.

The sanctions are severe: from heavy fines and seizure of goods to exclusion from public procurement and subsidies. It is clear that the EU is serious: companies that are not in order risk severe consequences.

In the short term, the EUDR may feel like an extra administrative burden. Companies must set up new processes, establish traceability systems, and work more closely with their suppliers. Yet, it also offers opportunities: those who commit to traceability and sustainability can stand out, gain consumer trust, and avoid reputational risks. Those who start preparing today will build an advantage. Companies investing now in robust due diligence processes will not only be compliant but also stronger in the market.