On 29 June 2023, the Regulation on Deforestation-free Products (EU) No 2023/1115 (“EUDR’’) entered into force. The EUDR repeals the Timber Regulation (EU) No 995/2010 (“EUTR”), as of 30 December 2026 for medium-sized and large operators and traders. The EUDR is the EU’s response to the continued absence of binding international rules to protect the world’s forests and biodiversity. The objective is to minimize the EU’s contribution to deforestation and forest degradation driven by EU consumption and production, while reducing the EU’s contribution to greenhouse gas emissions and biodiversity loss. To achieve this, the regulation targets seven commodities (instead of one): cattle, cocoa, coffee, oil palm, rubber, soya and wood – and their derived products, since these commodities are considered drivers of deforestation and forest degradation. Central to achieving these objectives is the (strengthened) role of the gatekeeper. The gatekeeper is the first line of defence under the EUDR: gatekeepers must ensure that non-compliant products under the EUDR do not enter the market.
This blog examines: i) what the gatekeeper’s function entails; ii) the legal obligations of gatekeepers under the EUDR; iii) a comparison with the EUTR; iv) the ESG aspect of the EUDR; and v) consequences for your business.
Gatekeeper function
Under the EUDR, the gatekeeper function primarily, but not exclusively, rests with operators: those who first place relevant commodities or products on the market or export them. Operators carry the primary burden of preventing non-compliant goods from circulating. Prior to placing relevant commodities or products on the market, operators must verify that these are deforestation-free, have been produced in accordance with the legislation of the country of production, and are covered by a due diligence statement or simplified declaration. The operator remains fully responsible for complying with the obligations laid down in the EUDR.The gatekeeper’s function is not limited to primary operators. It also extends to downstream operators and traders, albeit subject to a simplified and lighter regime. Downstream operators and traders reinforce this control architecture further down the chain, as set out in further detail below. Downstream operators are those who place products on the market or export them after these products have been processed and are already covered by a due diligence statement or simplified declaration. Traders, in turn, are any other natural or legal persons within the supply chain who make relevant products available on the market.
The gatekeeper’s legal responsibilities
Primary operators must exercise full due diligence prior to placing relevant products on the market. This due diligence consists of the following three pillars: i) the collection of information; ii) taking risk assessment measures while taking into account the relevant criteria (for instance the presence of forests); and iii) the implementation of risk mitigation measures (unless there is no or only a negligible risk) in order to ensure that the level of risk is reduced to none or a negligible level.
When concluding that the products are deforestation-free and have been produced in accordance with the legislation of the country of production, primary operators must submit a due diligence statement to the competent authorities. By submitting the due diligence statement to the authorities, the operator assumes responsibility.
Downstream operators and traders have lighter responsibilities. They do not have to submit a due diligence statement, but they must:
- Maintain accurate records of the operators, downstream operators or the traders who have supplied the relevant products to them;
- Where the supplier is an operator, retain the reference numbers of the relevant due diligence statements;
- Keep a clear record of the downstream operators, or the traders to whom they have supplied the relevant products;
- Retain all relevant documentation for a minimum period of five years.
Downstream operators and traders must act immediately if they become aware of new information, including substantiated concerns, suggesting that a product they have placed or made available on the market may not comply with the EUDR. In such cases, they are required to inform the relevant competent authorities, as well as the supply chain partners to whom they have supplied the product.
For non-SME downstream operators and traders, the obligation goes further. If they become aware, prior to placing, making available or exporting a product, that it may not comply with the EUDR, they must inform the competent authorities and (in case of substantiated concerns) verify whether proper due diligence has been carried out. They may only proceed if that verification confirms that there is no or only a negligible risk of non-compliance.
Administrative and/or criminal liability
Failure to comply with these legal responsibilities may result in administrative or even criminal liability. The EUDR requires Member States to lay down rules on specific penalties applicable to infringements, for instance a maximum fine of at least 4% of the operator’s, downstream operator’s or trader’s total annual Union-wide turnover in the financial year preceding the fining decision and confiscation of relevant products and revenues, temporary exclusion of the public procurement process and temporary prohibition of placing the relevant products on the market.
Moreover, a violation of the EUDR constitutes an economic offence under the Dutch Economic Offences Act (in Dutch: Wet op de economische delicten). As a result, both companies and their director may incur criminal liability. Sanctions can include imprisonment for up to six years, community service or a fine of up to EUR 1,100,000, or up to 10% of the company’s annual turnover.
Comparison of the gatekeeper’s obligations under the EUDR and EUTR
Under the EUDR, companies must demonstrate that their products do not originate from deforested areas, whereas under the EUTR, companies are required to show that the timber they place on the market was legally harvested. Compared to the EUTR, the EUDR significantly expands both the scope and the depth of compliance obligations. It does not only cover a broader range of commodities and derived products, but also introduces more stringent transparency and traceability requirements. Below, the most relevant points of comparison are outlined.
First of all, under the EUDR the concept of ‘export’ is expressly included within the definition of ‘operator’, thereby broadening the scope of (the obligations of) the operator. This has two implications: i) companies that export the relevant commodities or products also fall under the category of operators and ii) companies first processing relevant materials on the market were classified as traders under the EUTR, but they now qualify as operators.
Secondly, while the overall structure of the due diligence obligations remains broadly the same, the requirements are set out in significantly greater detail. Operators are now required, for instance, to collect information regarding the geolocation of all plots of lands where the relevant commodities were produced, as well as conclusive and verifiable information demonstrating that the products are deforestation-free.
A further structural change concerns the introduction of downstream actors and the obligations of traders. Under the EUTR, the only actor below the (primary) operator in the chain were traders. Their role was limited to traceability obligations; they were not required to verify compliance or to carry out any form of (simplified) due diligence.
The EUDR and the “E” of ESG
The EUDR directly connects to the broader ESG framework. Whereas ESG (policies) encourages companies to identify and manage deforestation and supply chain risks, the EUDR makes this legally enforceable for operators and, to a more limited extent, other supply chain actors. The gatekeeper role under the EUDR therefore represents a concrete operationalisation of the “E” in ESG: deforestation risks are no longer merely a sustainability objective or reporting topic, but a compliance obligation carrying supervisory and sanction risks.
What does this mean for your business?
The EUDR preserves the gatekeeper model established under the EUTR, but requires (primary) operators to carry out more extensive due diligence. Its introduction therefore calls for careful preparation. A thorough understanding of the new requirements, combined with a structured and timely implementation, is essential to ensure compliance and to properly manage the impact of the EUDR, particularly given that non-compliance may give rice to administrative or criminal liability.
