: What Businesses Need to Know)
In a significant move to combat global deforestation, the European Union is replacing the EU Timber Regulation (EUTR) with the new EU Deforestation Regulation (EUDR). This groundbreaking legislation originally scheduled to take effect at the end of 2024, has been delayed by 12 months to 30th December 2025 for large operators and 30th June 2026 for small and medium enterprises.
The delay provides businesses with additional time to prepare for stricter controls on the import and export of commodities linked to deforestation. Although these upcoming regulations do not directly apply to UK importers, UK businesses should proactively support their EU customers by providing the required supply chain evidence. It’s also important to stay ahead by preparing for similar amendments to existing UK deforestation regulations that may be introduced in the future.
Why introduce the EUDR?
Deforestation is a major driver of biodiversity loss and contributes significantly to climate change. Recognising the need for more comprehensive action, the EUDR broadens the scope of the EUTR to include a wider range of commodities and enforces more stringent requirements to ensure that products entering or leaving the EU market are deforestation-free.
Which Commodities are Affected?
The EUDR targets a range of commodities and products associated with deforestation, both legal and illegal. These include:
- Wood and wood-based products (building materials, furniture, paper)
- Palm oil (and derivatives like cosmetics, detergents, and food products)
- Soy (a key ingredient in animal feed and food manufacturing)
- Cocoa (used in chocolate and confectionery)
- Coffee
- Rubber
- Cattle products (including beef and leather goods)
Any products containing these raw materials, such as processed foods or leather apparel, are also within the scope of the regulation.
Who Is Affected?
The EUDR applies to any company trading the listed commodities within the EU, including small and medium-sized enterprises (SMEs). However, the level of scrutiny may vary depending on the size and nature of the business.
Key Obligations Under the EUDR
Under the new rules, businesses must exercise due diligence to demonstrate that their supply chains are free from deforestation. This involves:
- Geolocation Data Collection
Companies must gather precise geolocation data for the land where the commodities were produced. This data will enable authorities to verify whether the production occurred in deforested areas.
- Risk Assessment
Businesses are required to conduct thorough risk assessments to ensure their supply chains do not contribute to deforestation. Any risks identified must be mitigated effectively.
- Compliance Declarations
Companies importing or exporting covered commodities must file a declaration with EU authorities, certifying compliance with the EUDR.
Penalties for Non-Compliance
Failure to comply with the EUDR could lead to fines, seizure of goods, and even exclusion from the EU market. The exact penalties will be determined by individual Member States but will be proportionate to the environmental harm caused.
Preparing for the EUDR
With the regulation coming into effect soon, businesses must act now to align their supply chains with the EUDR’s requirements. Building transparency, establishing strong relationships with suppliers, and leveraging technologies like blockchain for traceability, which allows for the tracking of materials from their point of origin all the way to the end consumer, can help companies ensure compliance.
For more information on how to prepare or for more general EU customs inquiries, our experienced customs team can be contacted on our website.
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