The European Union's Deforestation Regulation (EU) 2023/1115) entered into force in June 2023 and fully replaced the EU Timber Regulation as of June 29, 2023. The regulation, also known as the EUDR, is centered on ensuring that key commodities and their derivatives placed on or exported from the EU market are deforestation‑free and legal.
Key objectives of the EUDR
The goals of this regulation are to promote transparency and traceability in supply chains, making it easier for consumers to make informed choices about the products they purchase. The key objectives of the EUDR are to:
- Block products tied to deforestation and forest degradation
- Reduce the EU’s carbon footprint by promoting climate‑friendly sourcing
- Incorporate labor rights, environmental standards, and anti‑corruption standards
- Retain forests that store CO2
- Address deforestation and forest degradation caused by agricultural expansion to produce certain commodities
Who must comply with the EU Deforestation Regulation?
The EUDR applies to operators and traders, excluding Small and Medium-sized Enterprises (SMEs), that import products into the EU market. Operators are entities placing commodities on the EU market. Non-SME Traders are companies commercializing products containing in-scope items.
Which commodities are covered by the EUDR?
To effectively curb deforestation, the EUDR targets high-risk commodities known to drive forest loss through agricultural expansion and land use change. The regulation applies to the following products:
- Timber
- Beef
- Palm oil
- Soy
- Coffee
- Cocoa
- Rubber
It also extends to certain derivatives such as leather, chocolate, furniture, and other processed goods linked to these raw materials.
EUDR due diligence requirements
All operators and traders that do not qualify as SMEs must comply with a three‑step due diligence framework:
Step 1: Conduct due diligence
Collect the information outlined in Article 9 of the regulation
This includes:
- a description of the commodity or product
- the country of production
- the geographical coordinates of where the commodities were grown
All of this information must be included in the due diligence statement. If any of the required information cannot be collected for a commodity or product, it is not allowed to be placed on or exported from the EU market.
Conduct a risk assessment
Verify and evaluate the risk of non-compliant products entering the supply chain using the criteria outlined in Article 10 of the regulation. This includes assessing the reliability of sourcing practices, historical land-use data, and the prevalence of deforestation in the region of origin.
Companies must describe how the information was gathered, how it was assessed against the EUDR risk criteria, and how the final risk determination was made.
Carry out sufficient risk mitigation
If any level of risk is identified, mitigation actions must be taken before the product can enter the EU market. Consider the criteria outlined in Article 11 of the regulation and take documented steps to minimize or eliminate the risk, such as switching suppliers, conducting audits, or obtaining additional documentation.
All mitigation efforts must be included in the due diligence statement.
Step 2: Submit due diligence
Once due diligence is complete, companies must submit a due diligence statement through the EU’s information system, TRACES NT.
The statement must confirm that the product is deforestation‑free, legally produced, and compliant with the EUDR. No products can be placed on or exported from the EU market until this submission is complete.
Step 3: Retain due diligence records
Companies are required to retain all documentation related to due diligence—including information collection, risk assessments, and mitigation—for at least five years.
These records must be made available to enforcement authorities upon request to demonstrate compliance with the regulation.
When is the EUDR compliance deadline?
Although the EUDR entered into force on June 29th, 2023, operators and traders have until December 30, 2025, for large and medium-sized companies to implement the new rules and due diligence process. Micro and small enterprises have a longer grace period and are not required to comply until June 30th, 2026.
Penalties for EUDR noncompliance
Companies that fall within the scope of the EUDR will be monitored by enforcement authorities and held accountable for noncompliance.
To meet EUDR requirements, companies must be able to:
- Submit a due diligence statement that includes the exact geolocation coordinates of where commodities are produced
- Provide documented evidence of sustainable and legal sourcing
- Maintain traceable records that allow authorities to verify compliance at any time
Failure to comply can result in significant penalties, including:
- Fines: At least 4% of annual EU turnover
- Confiscation: Non‑compliant goods may be seized or destroyed
- Market restrictions: Temporary bans from the EU market and public procurement contracts
- Corrective actions: Mandatory product recalls, withdrawals, or disposal
- Public exposure: Being listed publicly as a violator of the EUDR
- Reputational damage: Long‑term harm to brand credibility and financial performance
These enforcement measures make strong compliance and transparent supply chains not just regulatory requirements, but critical to protecting your reputation, preserving market access, and maintaining customer trust.
The challenges businesses face with EUDR compliance
Implementing the EUDR introduces a range of operational, technical, and strategic challenges for companies navigating global supply chains. Key hurdles include:
- Traceability demands: Operators must map detailed supply chains down to sub‑tier suppliers (something many businesses have never done at this level of granularity).
- Geolocation precision: Verifying plot-level coordinates is costly and disruptive, especially when sourcing from smallholders or informal suppliers.
- Commodity confusion: Many companies struggle to determine whether processed goods and derivatives (such as palm oil in packaged foods) fall under the regulation.
- Global trade tension: Exporting countries like Indonesia and Malaysia have pushed back on EUDR implementation, citing burdensome requirements and potential trade impacts.
Beyond the logistical complexity, complying with this regulation adds significant pressure to already overstretched compliance teams. Establishing a deforestation-focused due diligence process, tracing commodities to their origin, and continuously assessing risk requires time, technology, and expertise.
Compliance is a moving target.As the environmental impacts of deforestation intensify, the EU may expand the EUDR’s scope to include even more commodities—forcing companies to scale their efforts further just to keep pace.
Streamline the EU Deforestation Regulation due diligence process
Here’s where Source Intelligence plays a vital role in helping businesses operationalize due diligence without replacing decision‑making authority.
Our purpose-built SaaS platform empowers companies to:
- Trace products back to origin with geolocation support.
- Validate supplier data through real-time verification.
- Score risk using Article 9‑aligned scoring and multi-source datasets.
- Submit due diligence statements directly via integration with EU TRACES as an authorized representative.
- Monitor land use changes using satellite imagery and risk models.
Partnering with Source Intelligence means:
- Your team can collect and centralize supplier data across tiers—from raw commodity to finished product—with transparency.
- Data validation and risk scoring to reduce manual review burdens.
- Automated risk flagging, which helps focus attention where it matters most, while supporting timely supplier follow-up
- Documentation is centralized and audit-ready, and due diligence statements can be filed directly via EU TRACES.
Although the ultimate compliance responsibility lies with your operations and procurement teams, Source Intelligence acts as a powerful support system—enabling your internal processes, record-keeping, and strategic supplier engagement to work efficiently. Explore our solution to learn more about how you can streamline EUDR due diligence.
