_eu deforestation regulation: new due diligence obligations for companies from 2026
The EU Deforestation Regulation (EUDR, Regulation (EU) 2023/1115) regulates the placing on the market and export of certain raw materials and products associated with deforestation or forest degradation. The aim of the regulation is to prevent the import and trade of products from deforested regions and thereby combat global deforestation.
In the following article, we provide an overview of the key regulations, the currently planned schedule and the practical implications for European companies.
I. Who and what is affected?
The EUDR affects both raw materials and products made from them. The following raw materials are covered:
- Cattle
- Cocoa
- Coffee
- Oil palm
- Rubber
- Soy
- Wood
as well as all products listed in Annex I of the EUDR, including consumer and industrial goods that contain or are made from these raw materials. The EUDR is aimed at market participants and traders.
Market participants within the meaning of the regulation are natural or legal persons – regardless of size or legal form – who place relevant products on the EU market for the first time or export them from the EU (e.g., importers).
Traders are actors who further distribute or export relevant products after they have been placed on the market. Here, too, the size of the company is irrelevant.
The distinction is relevant for the allocation of the respective obligations.
The core element of the regulation is the prohibition of the placing on the market and export of the above-mentioned products unless the following conditions are met (Art. 3 EUDR):
- The products are deforestation-free.
- Production was carried out in accordance with the regulations of the country of production (Art. 2 No. 40 EUDR).
- A due diligence declaration in accordance with Annex II of the EUDR is available.
Products are only considered deforestation-free if the underlying raw materials were not produced on land that was deforested after December 31, 2020. Relevant deforestation occurs in particular when forest areas were converted into agricultural land after this date.
II. Obligations for companies
Companies must fulfill comprehensive due diligence obligations under the EUDR. This applies in particular to:
- Obtaining information on the traceability of the product back to the cultivation area (geo-coordinates)
- Assessing the risk that the products are not deforestation-free
- If necessary, measures to minimize risk must be taken
- Documentation and verification requirements
The specific requirements depend on the size of the company — in particular, a distinction is made between SMEs and non-SMEs.
1. Due diligence (Art. 8 EUDR)
Market participants and non-SME traders are required to:
- Collect information (including product composition, geolocation data, supply chain)
- Conduct a risk assessment in accordance with Art. 10(2) EUDR (e.g., forest cover, indigenous populations, prevalence of deforestation in the country of origin)
- implement risk mitigation measures where necessary, for example through additional documentation, audits, or supplier agreements.
In addition, non-SME market participants must appoint a compliance officer at management level (Art. 11 (2)(a) EUDR).
Once due diligence obligations have been fulfilled, a due diligence declaration must be submitted (Art. 4 (2) EUDR) and sent electronically to the competent authority. This declaration confirms that due diligence has been carried out and that there is no risk or only a negligible risk.
2. Documentation and evidence
All risk analysis and mitigation measures must be documented and submitted to the competent authorities upon request. In addition, relevant information must be shared within the supply chain to demonstrate compliance with due diligence obligations.
3. Obligations for SMEs
In principle, the essential prohibitions of the EUDR (Art. 3 EUDR) also apply to small and medium-sized enterprises (SMEs). However, they are subject to simplified requirements:
- If the products have already undergone a full due diligence assessment and a due diligence statement is available, SME market participants are not required to carry out the assessment again (Art. 8(8) EUDR).
- SME market participants are subject to simplified reporting requirements (Art. 12(3) EUDR).
In particular, SME traders are not required to carry out a full due diligence assessment, but are obliged to keep relevant information on traceability and risk assessment available and to disclose it at the request of the authorities. The obligations of traders are aimed at ensuring the transparency and integrity of supply chains even after the products have been placed on the market (see Art. 5(2)-(5) EUDR).
III. Timetable
Although the EUDR came into force in June 2023, the start date for the obligations has already been postponed by one year from December 30, 2024. The obligations will be applied in stages:
- From December 30, 2025 for large companies
- From June 30, 2026 for small and micro-enterprises
After Environment Commissioner Jessika Roswall proposed another one-year postponement, a further extension limited to small enterprises until December 2026 is currently under political discussion. However, a general postponement for all enterprises is not currently planned.
Following considerable criticism from the business community due to the high burden of bureaucratic requirements, the EU Commission has proposed simplifying reporting obligations. When and in what form the EUDR will come into force is currently unclear.
IV. Enforcement and sanctions
Sanctions for violations of the EUDR are determined by the member states (Art. 25 (1) EUDR), but must be effective, proportionate, and dissuasive.
Possible sanctions include:
- Fines that skim off economic profits
- Fines of at least 4% of annual EU-wide turnover (for legal entities)
- Confiscation of the products concerned or the proceeds derived from them.
V. Specific requirements for companies
Companies should implement the following measures in a timely manner:
- Conduct a supply chain analysis of affected raw materials
- Establish geolocation and traceability systems down to the parcel level
- Develop standardized risk assessments and documentation processes
- Revise supplier contracts with:
- Assurances of deforestation-free sourcing
- Audit and control rights
- Disclosure requirements regarding origin
- Sanctions for violations
- Mechanisms for reversal and cost-neutral replacement deliveries
- Adaptation of IT systems, reporting processes, and compliance workflows
- Establishment of efficient verification and information processes
VI. Conclusion
The EU Deforestation Regulation brings with it significant new requirements for companies in the areas of procurement, documentation, and contractual practice. The effort involved in risk assessment, traceability, and verification is considerable. Early implementation of appropriate processes is therefore strongly recommended—even if a postponement of the effective date of individual provisions is under consideration.
Our law firm provides comprehensive support for the legally compliant implementation of the EUDR:
- Conducting risk analyses,
- Legally compliant contract drafting with suppliers and service providers,
- Establishing documentation and verification processes.
Please do not hesitate to contact us.
Dr. Benjamin Knebel, Lawyer, Associate
Johanna Dobert, Lawyer, Associate