The Regulation (EU) 2023/1115 on deforestation-free supply chains was originally set to apply to initial companies on 30 December 2024. After long ignoring calls for a postponement, the EU Commission, the European Council and the EU Parliament finally agreed on 3 December 2024 to an amendment to the EUDR that postponed its application date.
This amending regulation was published in the Official Journal of the EU on 23 December 2024 and entered into force three days later.
This means businesses have been given more time to ensure that products obtained from certain relevant commodities (so-called relevant products) are deforestation-free and have been produced in accordance with the national legislation of the respective country of production.
Who is affected and when?
The EUDR came into force on 29 June 2023. However, a transitional period remains between the effective date and the date from which the requirements of the EUDR will apply for the first time. As it's a Regulation, the EUDR will be directly applicable in all EU Member States at the same time, without the need for transposition. Nonetheless, while the first companies will have to comply with EUDR provisions from 30 December 2025, the EUDR provides for a gradual expansion of its scope depending on the size of the company.
- From 30 December 2025, the provisions of the EUDR will apply to large and medium-sized companies.
- From 30 June 2026, the provisions of the EUDR will also apply to small and micro-enterprises.
The classification of your company as a "micro or small," "medium-sized," or "large" enterprise depends on the provisions of the national law of the Member State in which your company is established, applicable as of 31 December 2020, and may vary, so you should take local advice.
Which products are caught by the EUDR?
The EUDR focuses on "relevant commodities" and "relevant products".
- The "relevant commodities" are: cattle, cocoa, coffee, oil palm, rubber, soy and wood.
- The "relevant products" are those resulting from the relevant commodities, ie if they contain, are fed by or manufactured using them. Annex I of the EUDR contains a list of relevant products on the basis of their specific customs tariff numbers.
Practical tip: Compare the products listed in Annex I with your own products. Even if you are unable to assign your own product exactly to a customs tariff number, this can already give you a steer on whether your product could fall within the scope of application, although a specific check using the customs tariff number is always required for a final and binding check. Our free EUDR Quick Check can help you get an initial overview.
Note: Even if your own product matches one of the listed customs tariff numbers and is therefore generally considered a "relevant product", there may be exceptions and the product may still not fall within the scope of the EUDR. This should be checked on a case-by-case basis. Caution is also required as it is possible a product is relevant even if the customs tariff number is not explicitly listed in Annex 1. This is because the EUDR also refers to so-called "Combined Nomenclature" (Annex I of Regulation (EEC) No. 2658/87), which can contain other custom tariff headings not explicitly listed in Annex I of the EUDR.
Note: The EUDR also provides for an extension of the relevant commodities and products, to be published by 30 June 2025 at the latest.
What does the EUDR do?
The EUDR primarily provides for a ban on the market or export of relevant commodities and relevant products (Article 3). Companies may only place or make such commodities or products available if they are:
- deforestation-free
- produced in accordance with the relevant legislation of the country of production
- accompanied by a due diligence statement, which must be submitted for the relevant product.
If any one of these requirements is not met, the relevant product may not be traded by the company on, or exported from, the EU market. The obligation to comply is absolute.
Note: By submitting the due diligence statement to the competent authority, the company assumes responsibility for ensuring that the relevant products comply with the requirements of EUDR.
Who is caught?
The EUDR distinguishes between operators and traders, although they are subject to the same obligations.
- An "operator" is anyone who makes a relevant product available on the EU market for the first time or exports it from the EU.
- A "trader" is anyone who makes a relevant product available on the EU market repeatedly. As a result, traders are downstream of operators in the value chain.
The same company can be an operator and a trader (with regard to different products).
Note: SMEs may have simplified requirements (depending on the individual case), for example, SME traders need only collect very manageable amounts of information in relation to the upstream and downstream supply chain. For non-SME companies which only operate downstream, the EUDR also includes a simplification. A company is deemed to be operating downstream if it trades in relevant products for which EUDR due diligence has already been carried out at an earlier stage in the supply chain and a due diligence statement is therefore already available.
Practical tip: If you identify products within the scope of the EUDR, check whether and in which situations your company is an operator and/or trader and whether any reductions in scope apply.
What are the main obligations on non-SMEs?
Operators and traders that are not SMEs are subject to a comprehensive program of obligations. They must fulfil due diligence obligations proving that the relevant products are deforestation-free and have been produced in accordance with the relevant legislation of the country of production. These obligations are guaranteed by submitting a due diligence statement, which includes:
- collecting information
- carrying out a risk assessment
- if necessary, taking measures to reduce the risk.
Collecting information
This is the first step in fulfilling the due diligence obligations. Businesses must collect information, data and documents that show that the relevant products comply with the Regulation.
An important component of this information is the geodata of all land where the relevant raw materials contained in the relevant product were produced. This geodata must be included in the due diligence statement. By means of a before-and-after comparison, the geodata can determine whether deforestation or forest degradation has taken place after the "deadline" of 31 December 2020.
Note: If deforestation or forest degradation is identified by means of geodata, the product is no longer "deforestation-free", meaning that there is a violation of Article 3 EUDR, and the trade ban applies.
Evidence must also be collected to demonstrate that the relevant legal provisions of the country of production have been observed in the production of the relevant commodities.
Note: In order to obtain this evidence, intensive cooperation with your upstream supply chain is required (since presumably only they have the necessary information). If the information cannot be obtained, the product must not be traded.
Practical tip: Make good use of the postponement and contact your suppliers to ensure they will be able to supply you with the required data (eg geodata, reference numbers for due diligence statements, etc.) accompanying the products they supply. This is because the due diligence statement must be submitted before the products are placed on or made available on the market, or exported.
Risk assessments
Businesses must carry out a risk assessment based on the due diligence information gathered to determine whether there is a risk that the relevant products to be traded are non-compliant within the meaning of the EUDR. The EUDR specifies a large number of criteria to be taken into account in the risk assessment. For example, the extent to which there is an abstract risk of deforestation in the country of production, as well as the reliability of the sources from which the collected information originates.
Note: The risk assessment analyses the collected information and takes into account abstract factors (such as the general deforestation risk in the producing country) and more concrete factors (such as the reliability of the information).
If the risk assessment reveals there is no or only a negligible risk, the due diligence statement can be submitted and the relevant product can then be traded.
Risk mitigation
If the risk assessment shows that the risk is not negligible, the company must take measures to reduce the risk. This may include, for example, requesting additional details and conducting independent surveys or audits to ensure that the product is actually compliant. Measures to support suppliers may also be helpful.
Note: If it's not possible to mitigate risk sufficiently, the due diligence statement cannot be submitted. This is because it expressly requires a declaration that no risk or only a negligible risk has been identified.
Practical tip: A downstream position within the supply chain can significantly ease the effort required for non-SME companies to comply with the EUDR. If a non-SME company only operates downstream, a due diligence statement must still be submitted, but only to verify that the EUDR due diligence has been complied with at the previous level of the supply chain. In other words, in this particular case, there is no need for extensive information gathering, risk assessment and, if necessary, risk mitigation.
How is the EUDR enforced?
The competent authorities have various control and monitoring powers. Control options include scientific and technical analysis to determine the place of origin and the absence of deforestation when it comes to the relevant commodities and products.
Where there is a high risk, the competent authorities may take interim measures to suspend the placing or making available on the EU market. To end an infringement as quickly as possible, companies may be required to take immediate corrective action. The authority may impose distribution and export bans on the relevant products and order their withdrawal or recall. The competent authority may also require the relevant product to be donated for charitable or public interest purposes.
The EUDR requires EU Member States to adopt "effective, proportionate and dissuasive" rules on penalties including the following measures:
- fines or penalties
- recovery of the relevant products
- collection of revenue from the relevant products
- exclusion from award procedures
- prohibition on placing or making available on the EU market and for export
- prohibition of the application of simplified due diligence.
Of course, there are also reputational risks. The EU Commission will publish court-confirmed EUDR violations committed by businesses online, citing the name of the company and the conduct that caused the infringement.
What should you do now?
Once the EUDR applies, in-scope businesses will no longer be able to trade their own products if they do not meet the EUDR's requirements. The postponement of the application date has given them more time to prepare for compliance.
Businesses should:
- establish whether their products fall within the scope of the EUDR
- determine their role under the EUDR (operator or trader, SME or non-SME, primary or downstream position in the supply chain).
- contact their suppliers to ensure they are aware of the EUDR requirements and confirm they can provide required information or submit their own due diligence statements.
- review existing supplier contracts and potentially renegotiate them to reflect EUDR-related obligations (eg by adapting a supplier code of conduct, contractual agreement of information rights, obligations to disclose EUDR-related information and to compensate in the event of non-compliance, etc.)
- establish internal processes for information gathering, risk assessment and, if necessary, risk mitigation as well as a process for reviewing previous due diligence statements in the case of a downstream position in the supply chain.
We would be happy to support you in implementing the EUDR.
