ESG Quick Guide: EU Deforestation Regulation

The EUDR, which applies from 30 December 2026 for large in-scope companies, prohibits operators and traders from placing or making available on the EU market, or exporting from the EU, certain listed commodities (cattle, cocoa, coffee, oil palm, rubber, soya and wood) and derived products, unless they:

1. are “deforestation-free” (i.e. produced or harvested on land that has not been subject to deforestation after 31 December 2020); 

2. have been produced in accordance with the legislation of the country of production; and 

3. are covered by a due diligence statement, submitted through an online information system. 

Micro or small primary operators and downstream operators and traders (see below for definitions) will be subject to limited obligations. 

In response to concerns regarding operational readiness and the technical complexities of the new information system, the Council and Parliament agreed in December 2025 on a one-year postponement of the application of the Regulation for all operators, together with a package of simplification measures (see our blog post). These simplification measures include limiting the requirement to submit due diligence statements only to operators first placing products on the market. 

The Regulation amending the EUDR was published in the Official Journal of the EU on 23 December 2025 (see here). 

Mandatory

The Regulation has been delayed twice by one year, and is now set to apply from 30 December 2026 for large in-scope companies and 30 June 2027 for small and micro enterprises (SMEs) (see our blog post). 

The companies in scope are two-fold: 

• 'Operators', being any natural or legal person who, in the course of a commercial activity, is the first party to make in-scope products available on the EU market (so-called “placing on the market”) or export them from the EU. The December 2025 simplification package introduced two new sub-categories of operators, which are subject to simplified obligations: 

  • Micro or small primary operators, i.e. natural persons or micro- or small-sized undertakings, established in a country classified as low risk under the EUDR, placing in-scope products on, or exporting them from, the EU market , which they themselves produce. 

    Undertakings that are able to demonstrate that the parts of their balance sheet total, net turnover and average number of employees which relate to the relevant commodities and the relevant products do not exceed the limits for at least two of the three criteria for micro and small undertakings as set out in the Accounting Directive 2013/34/EU also qualify as micro or small primary operator.

  • Downstream operators, i.e. any natural or legal persons who place in-scope products on, or export them from, the EU market where such products are already covered by a due diligence statement or simplified declaration (see below).

• 'Traders', meaning any companies further in the supply chain that, in the course of a commercial activity, make relevant products available on the EU market (but they do not make them available on the EU market for the first time). Traders are subject to limited obligations. 

The EUDR regime adopts an individual company approach and may thus apply to intra-group transfers.

Operators must comply with a full set of due diligence and reporting obligations. 

In particular, they must: 

• Exercise due diligence, i.e. (i) collection of information, data and documents needed to fulfil the due diligence statement and prohibition to place or make available on the EU market or export therefrom non-compliant products; (ii) risk assessment measures; and (iii) risk mitigation measures. Operators must publicly report on their due diligence system on an annual basis.

• Submit a due diligence statement in a dedicated online system (see here) before placing products on the EU market (or exporting from the EU).

• Collect and keep due diligence statements, and their underlying documentation as well as all documentation related to due diligence, for a five-year period.

• Not place on the EU market non-compliant products.

• Report potential non-compliances to competent authorities.

• Cooperate with competent authorities and other actors of the supply chain.

Micro or small primary operators are not required to submit separate due diligence statements. Instead, they must: 

• Submit a one-off simplified declaration, where the information required is not already available in an existing database or system, before placing products on the EU market (or exporting from the EU).

• Not place on the EU market non-compliant products.

• Report potential non-compliances to competent authorities.

• Cooperate with competent authorities and other actors of the supply chain.

Downstream operators and traders are not required to submit separate due diligence statements or verify the due diligence exercised by operators. Their obligations are limited to:

• Collect and keep reference numbers of due diligence statements and simplified declarations as well as certain information on the downstream operators or traders to whom they have supplied the relevant products, for a five-year period. This obligation will only apply to the first downstream operator and trader (according to the recitals of the Regulation of 19 December 2025 which simplified the EUDR).

• Not place on the EU market non-compliant products.

• Register in the information system.

• Report potential non-compliances to competent authorities.

• Cooperate with competent authorities and other actors of the supply chain. 

The European Commission is required to carry out a simplification review by 30 April 2026, to evaluate the administrative burden and impact of the EUDR, particularly for micro and small operators. The Commission will be required to outline in its report possible ways to address any issues identified, including through technical guidelines, improvements to the IT system, delegated or implementing acts and, where appropriate, a legislative proposal.

The commodities covered are cattle, cocoa, coffee, oil palm, rubber, soya, and wood. 

The EUDR is only applicable to “relevant products” listed in Annex I. 

Products not included in Annex I, but which might include components or elements derived from commodities covered by the Regulation – such as trucks with leather seats or natural rubber tyres – are not subject to the requirements of the Regulation.

Guidance from the European Commission confirms that there is no minimum threshold for the application of the Regulation (i.e., there is no “de minimis” exemption).

Each of the 27 EU Member States must designate one or more competent national authorities to enforce the EUDR. In practice, this will usually be the same authority that was responsible for the EUTR. This will likely lead to different interpretations and enforcement priorities in each Member State.

Violation of the EUDR obligations can result in fines that must be proportionate to the environmental damage caused and to the value of the relevant commodities or relevant products concerned. The maximum amount of these fines shall be at least 4% of the infringer’s total annual EU-wide turnover (calculated in accordance with the calculation of aggregate turnover) in the financial year preceding the fining decision, increased where necessary to exceed any potential economic benefit gained.

The EUDR also puts emphasis on corrective actions to be imposed on operators/operators (e.g. preventing the relevant product from being placed or made available on the market or exported, withdrawing or recalling of the relevant product). 

National authorities will have the obligation to carry out annual checks within their territory focusing on operators of relevant products from high risk jurisdictions. The country classification system serves as a basis for the risk-based approach whereby member states’ competent supervisory authorities define and plan their minimum annual compliance checks of operators, namely: 

• 1% (of operators) for low-risk countries,

• 3% (of operators) for standard-risk countries, and

• 9% (of operators and of quantity of relevant products) for high-risk countries. 

Complaints alleging non-compliance can also be filed by natural or legal persons with national authorities.

The new Environmental Crime Directive 2024 adds an additional layer of exposure. It establishes minimum rules with regard to the definition of criminal offences and penalties, and now includes as a criminal offence the placing or making available on the Union market of products in breach of the general prohibition of Article 3 EUDR (see our blog post).

For such a breach to constitute a criminal offence, it must result from serious negligence and must not concern a negligible quantity of products. Where it constitutes a criminal offence, the breach of the Deforestation Regulation may result, for natural persons, in a maximum term of imprisonment of at least five years and, for legal persons, in fines the maximum amount of which may not be lower than 5% of the total worldwide turnover of the legal person or an amount corresponding to EUR 40,000,000.

The EUDR replaces the EU Timber Regulation (“EUTR”) (the “predecessor” to the EUDR which was limited to timber products and imposed less far-reaching requirements).

According to the Commission guidance, the EUDR is intended to operate in a complementary way with other EU due diligence regimes, in particular the Corporate Sustainability Due Diligence Directive (“CSDDD” / “CS3D”). Where the due diligence rules under the EUDR require more specific compliance measures than those imposed under the CSDDD regime, the EUDR will prevail. A number of companies will only be subject to the EUDR in view of the high turnover / employee application thresholds of the CSDDD.

Operators can meet their reporting obligations under the EUDR by incorporating the required information into their reporting under other EU instruments, such as the Corporate Sustainability Reporting Directive (CSRD).

For more information on the CSDDD and CSRD, see our ESG Quick Guide: EU Corporate Sustainability Due Diligence Directive (CSDDD / CS3D)  and ESG Quick Guide: EU Corporate Sustainability Reporting Directive (CSRD). 

• EU Deforestation Regulation

• Commission Guidance (not yet updated to take into account the December 2025 simplification)

• FAQs (not yet updated to take into account the December 2025 simplification)

• The User Manual for the Information system

• Deforestation Regulation: EU imposes new due diligence duties on operators and traders

• EU Deforestation Regulation: Commission publishes guidance and proposes 12-month delay to application date

• EU Deforestation Regulation: final green light for the one-year postponement

• EU: Commission publishes new guidance and draft Delegated Act to simplify due diligence requirements under Deforestation Regulation

• EU Deforestation Regulation: country risk classification adopted by the Commission

• EU: changes to Deforestation Regulation reach the finish line

• EU Omnibus Tracker

• ESG Quick Guide: EU Corporate Sustainability Due Diligence Directive (CSDDD / CS3D)

• Other ESG Quick Guides