EU Deforestation Regulation: what companies need to know now

With Regulation (EU) 2023/1115, known as the EU Deforestation Regulation (EUDR), the European Union has taken a significant step towards combating global deforestation and forest degradation. It forms part of the EU strategy to reduce its environmental footprint and meet international commitments (the Paris Agreement and UN Sustainable Development Goals). The EUDR requires companies to ensure that certain commodities and products made from them are deforestation-free before they are placed on the EU market or exported from the EU.

Background and objectives of the Deforestation Regulation

The Deforestation Regulation was developed to minimise the EU’s contribution to global deforestation and forest degradation. Having already been postponed, comprehensive compliance requirements will now apply from 30 December 2025 to companies that place certain goods on the EU market or export them. They must demonstrate that their products are deforestation-free.

The core requirements are due diligence obligations, including the traceability of commodities through the geolocation of all relevant production areas and detailed due diligence statements. Companies must provide information on products, the time of production and risk assessments for the country of production. Compliance requires adjustments to internal processes.

Breaches may result in severe penalties such as:

• Penalty payments and fines (at least four per cent of annual turnover)
• Temporary prohibition on placing relevant commodities and products on the market
• Temporary exclusion from public procurement
• Reimbursement of the authorities’ financial costs

By introducing strict due diligence obligations, the Regulation is intended to ensure that companies verify that certain commodities, such as cattle, cocoa, coffee, oil palm, rubber, soya and wood, as well as products derived from them, have been produced without deforestation. This means that these products were not produced on land deforested after 31 December 2020. Other matters, such as whether land is indigenous territory, are also relevant.

Who is subject to the obligations?

The Deforestation Regulation affects all companies that place or make available relevant commodities or products made from them on the EU market, or export them from the EU. These include in particular:

• Manufacturers and importers of the affected commodities and products
• Traders selling these products within the EU
• Exporters marketing the affected products outside the EU

Timetable for implementing the Deforestation Regulation

The Deforestation Regulation will be implemented in stages:

• The obligations apply to large companies from 30 December 2025.
• Small enterprises have an extended deadline until 30 June 2026 to meet the requirements.

These deadlines are intended to give affected companies sufficient time to adapt their internal processes and optimise their supply chains.

Challenges and criticism of the Deforestation Regulation

The Deforestation Regulation presents companies with significant implementation challenges. In particular, the traceability and supply-chain documentation requirements demand substantial adjustments to internal processes. The Regulation has also been criticised for its bureaucratic requirements and potential barriers to trade. It is not without reason that implementation, originally scheduled for the end of 2024, was postponed by one year to give companies more time to prepare.

Support from Clarius with the Deforestation Regulation

Timely and effective implementation of the Deforestation Regulation is crucial to avoid potential fines and trade restrictions. Clarius supports companies with legal expertise and practical solutions to help them meet these challenges successfully.

Find out here about our services relating to the Deforestation Regulation. We will be glad to assist you.

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