EUDR Regulation: What companies need to know to comply with new EU requirements

The European Union has adopted Regulation (EU 2023/1115) on products that do not contribute to deforestation (known as the EUDR, EU Deforestation Regulation). Its aim is to reduce the impact of European consumption on global deforestation and forest degradation. It seeks to achieve this through more rigorous supervision of imports and exports of selected commodities and products. 

What does the EUDR cover? 

The regulation applies to the following seven commodities, as well as products in the manufacture of which at least one of them has been used: 

  • cattle 

  • coffee 

  • cocoa 

  • rubber 

  • palm oil 

  • soy 

  • wood 

Who is affected by the obligations under the EUDR? 

  • Economic operators: those who, in the course of their business, 'place' commodities or products on the internal market or export them. Placing on the market means the first delivery of a commodity or product to the market.  

  • Traders: anyone who, as part of their business activities, "supplies" products or commodities to the market within the supply chain, unless they are an economic operator. Typically, this will be an entrepreneur who further trades commodities or products on the internal market. Placing on the market means supplying the relevant product for distribution, consumption or use on the internal market, whether in return for payment or free of charge. 

What are the obligations of these entities under the Regulation? 

Economic operators 

  • Prepare and keep a due diligence statement 

  • Ensure product traceability (including geolocation data)  

  • Carry out risk assessments and mitigate those risks where necessary 

Traders  

  • Large traders (more than 250 employees or more than EUR 50 million in turnover) have the same obligations as economic operators 

  • Micro and small enterprises have less stringent requirements – they must keep information on suppliers and customers for 5 years 

Example: Coffee trade 

  • Company A – coffee importer from Brazil 

    • Imports green coffee to the port of Hamburg 
    • This is the first time the coffee appears on the EU market 
    • Company A = economic operator 
    • Must perform due diligence (verify origin, geolocate plantations, deforestation, and compliance with local laws) and upload the declaration to the E system 

  • Company B – coffee roaster in Germany (more than 250 employees or more than EUR 50 million in turnover) 

    • It purchases green coffee from Company A and roasts it 
    • It then sells the roasted coffee to supermarkets 
    • Company B = trader 
    •  Same obligations as Company A (economic operator) 

  • Company C – supermarket in the Czech Republic 

    • Sells roasted coffee to consumers 
    • Company C = also a trader 
    • Again, only obliged to keep information about suppliers and customers 

 

The EUDR is based on a system of due diligence. For each shipment, companies must prove that the products: 

  • Did not cause deforestation after 31 December 2020 

  • Come from legal sources, in accordance with the legislation of the country of origin 

  • Are traceable to the place of production – accurate geolocation data is required 

  • Have undergone a risk assessment and, where necessary, risk mitigation measures have been taken (e.g. supplier audits, certification) 

Compliance with obligations is documented by an electronic declaration of due diligence in the new EU information system (expected to be operational in 2025). 

How does the inspection work? 

The inspection authorities focus in particular on: 

  • The accuracy and completeness of declarations 

  • Geolocation data on the origin of commodities 

  • The quality of risk assessments 

  • Traceability of raw materials throughout the chain 

  • Compliance with the law of the country of origin 

  • Retained internal documentation 

Failure to comply with the regulation may result in fines of up to 4% of the company's annual turnover in the EU. 

How to prepare? 

Companies should: 

  • Map whether their products fall under the EUDR 

  • Collect geolocation and legal documents of origin 

  • Set up an internal traceability system 

  • Conduct a risk assessment and prepare procedures to mitigate risks 

  • Implement internal guidelines and checklists 

  • Ensure training for employees responsible for compliance 

Summary 

The EUDR fundamentally changes the requirements for trading in certain commodities and products. This is not just a formal obligation – companies will need to have a detailed overview of their supply chain and be able to prove that their products do not contribute to deforestation. Timely preparation is key to smooth compliance with the new rules and avoiding penalties.