EU deforestation regulation explained

The European Union deforestation regulation (EUDR) is the first-ever legislation aimed at eliminating deforestation in the commodity supply chains of one of the world’s largest markets. The regulation is a key contributor to the EU’s strategy to address climate change, biodiversity loss and human rights issues. Its proponents hope that the EUDR will inspire similar demand-side measures by other importing markets, and catalyse investments in traceability, monitoring systems and governance in producer countries.

The EUDR came into force on 29 June 2023. It takes effect on 30 December 2025, after having been delayed by one year as a compromise to fight off last minute attempts to weaken its requirements.

What are the EUDR’s main requirements?

Article 3 of the EUDR prohibits companies from importing or exporting relevant products to or from the EU unless they are:

• Deforestation free, meaning that products were not produced on land that was deforested (or for wood products, did not induce forest degradation) after 31 December 2020.
• Produced in compliance with relevant legislation of the producer country including land use rights, the free, prior and informed consent of indigenous peoples, labour rights, human rights under international law and environmental protection concerning the area of production.
• Covered by a due diligence statement that includes the geolocation of all plots of land where the relevant commodities were produced and confirms that due diligence has been carried out and there is no or negligible risk that the products are non-compliant with the deforestation-free and legality requirements.

What products are covered?

The EUDR applies to products that contain or have been made with commodities named in article 1 of the regulation: cattle, cocoa, coffee, palm oil, rubber, soy and wood. It also applies to derivatives of these commodities; for example, cocoa beans, paste, butter and chocolate. The number varies by commodity as more derivatives are included for cocoa, palm oil, rubber and wood products. Annex 1 of the regulation provides a complete list of the commodities and their derivatives that are included as identified by their ‘harmonized system’ identification codes.

Which companies are regulated?

The EUDR applies to companies that place regulated commodities on the EU market or export them from the EU. The regulation distinguishes between companies acting as ‘operators’ and ‘traders’:

• Operators are companies that import or export products to or from the EU and therefore take the lead role under the regulation. Article 4 of the regulation lists their specific obligations.
• Traders are companies in the EU that buy and use products. Article 5 lists their specific obligations.

Large companies fall under the EUDR from 30 December 2025, while small and medium enterprises (defined using thresholds in the EU accounting directive) will be regulated from 30 June 2026.

How does the due diligence requirement work?

Article 8 requires operators placing products on the market or exporting them to exercise due diligence including collecting information about the products, conducting risk assessments and considering risk mitigation.

Information requirements (article 9) include collecting and storing information on the name and quantity of the product, the country of production, the name of the supplier, the geographical locations of the plots of land where the product was produced, and verifiable information that the commodity shipment is deforestation-free and legally produced. This information forms the basis of the due diligence statement that operators must submit prior to importing or exporting products.

Due diligence requires operators to conduct a risk assessment to establish that there is no or negligible risk that products are non-compliant. Article 10 of the regulation lists the criteria that the risk assessment should cover including the prevalence of deforestation in the country of production, the risk of mixing commodities grown in different locations and the existence of claims by indigenous people on the land where the commodities were produced.

Due diligence also requires operators to take measures to mitigate the risk of non-compliance (article 11); for example, through having documented processes for the traceability and segregation of products, and having independent audits of internal policies and procedures.

Article 13 allows for simplified due diligence applicable for low-risk countries under which operators only have to meet the information collection requirements having assessed that that there is no or negligible risk based on the complexity of the relevant supply chain, the risk of circumvention or the risk of mixing with products of unknown origin or origin in high-risk or standard-risk countries. Full due diligence is still required if operators are made aware of any information that suggests relevant products do not comply with the regulation; for example, through a ‘substantiated concern’ raised by a civil society organisation under article 31.

How are producer countries affected by the EUDR?

Under article 29 of the EUDR, commodity producing countries will be benchmarked according to the risk that their products will not comply with the regulation’s requirements that they are deforestation free and legally produced. The three-tier system classifies countries (or parts thereof) as low, standard or high risk. The method of categorising countries is based on criteria including rates of expansion of agricultural land, levels of deforestation and production of commodities. It is important to note that the due diligence requirements for relevant products from high and standard-risk countries are the same; only the level of enforcement checks vary (see below). For countries categorised as low risk, simplified due diligence is applicable. The risk classifications were published in May 2025 (see risk classification challenges below).

Who is responsible for enforcing the regulation?

EU member states are required to designate competent authorities to enforce the EUDR. Article 16 sets out the obligations on competent authorities to carry out checks on compliance with the due diligence requirements. For products coming from countries deemed to be standard risk, at least 3% of operators should be checked. For high-risk countries the level is 9% (as well as 9% of the quantity of each of the relevant products) while for low-risk countries it is 1%. Non-compliant operators could be fined up to 4% of their turnover and have their products confiscated.

The Cerrado is largely excluded from the EUDR (Image: Victor Moriyama for Rainforest Foundation)

What are the key challenges associated with the EUDR?

Exclusion of ecosystems other than forests

The EUDR definition of forests aligns with the Food and Agriculture Organization’s definition. This means the EUDR does not apply to savannah forests defined by the FAO as ‘other wooded land’, or other ecosystems such as grasslands and wetlands. However, Trase analysis shows that in Brazil only 17% of recent soy expansion into natural habitats was into forested areas, with traders much more likely to be sourcing soy that has encroached on the Cerrado and Pampa which is largely unprotected by the EUDR. The regulation contains a review provision to consider, by 30 June 2024, extending its scope to cover other wooded lands, and by June 2025 to consider including further ecosystems. However, the European Commission has yet to publish findings of the first impact assessment.

Due diligence and data availability

Geospatial data on the location of forests, types of land use and the existence of deforestation will be essential for companies to conduct due diligence and for competent authorities to conduct risk-based checks of commodity shipments.

There are a large number of publicly available ‘open’ datasets and products from government sources, research and civil society initiatives, as well as closed offerings from commercial service providers. However, these datasets were not originally developed for the purposes of the EUDR and do not necessarily align with its definitions and criteria. There are also limitations in mapping accuracy and difficulties in differentiating forests and perennial crops such as cocoa.

Despite this, existing open datasets provide a cost-effective resource that can be used to credibly assess risks of non-compliance with the EUDR’s deforestation-free and legality requirements. Companies and competent authorities need to understand their limitations, their appropriate use, and how to mitigate these issues through combining datasets. Moreover – especially for compliance with the legality requirement – consultation with local experts and stakeholders in producer countries is advisable to identify risks of illegality and assess evidence of legal compliance.

Risk classification

In May 2025, the European Commission published its risk classification of commodity producing countries in which it has designated only Belarus, North Korea, Myanmar and Russia as high risk. Countries including Brazil and Indonesia are deemed to be standard risk, while the EU and North America are low risk. This does not provide an accurate reflection of the deforestation and legal risks in areas of commodity production and reduces the ability of competent authorities to target enforcement checks.

A variety of existing datasets, including Trase, can inform the development of risk-based approaches to target checks on shipments from higher risk operators, ports of export and plots of land in high-risk subnational regions as set out in article 16(3). Trase has supported companies to successfully apply similar subnational benchmarking approaches to identify risks in their sourcing. Trase recommends that the Commission develops a more credible and evidence-based benchmarking process to facilitate achievable, pragmatic and effective enforcement of the EUDR.

Traceability and smallholders

Although the EUDR’s plot-level traceability requirement should help guide action to reduce deforestation linked to EU commodity imports, it will be challenging to meet for supply chains with high numbers of smallholders, such as coffee, rubber and palm oil, and for long supply chains with lots of intermediaries and indirect suppliers such as cattle and cocoa. For example, Trase data shows that around 60% cocoa from the Côte d’Ivoire, the world’s leading producer of cocoa, is indirectly sourced or of unknown origin.

Support for smallholder farmers is needed to avoid their exclusion from the EU market, for instance through investments in national traceability and forest monitoring systems. There is also a strong need for companies to engage with their suppliers in a way that protects and supports the livelihoods of smallholder farmers while also ensuring compliance with the EUDR.

Despite these challenges, the EUDR promises to substantially reduce the EU’s role in driving deforestation and could encourage the adoption of similar demand-side measures in other markets; especially China, which is by far the largest export market for beef and soy. The EUDR could also incentivise both companies and producer countries to invest in more sustainable ways of producing commodities, including stronger traceability and monitoring systems, stronger governance and enforcement measures, and incentives to support producers to shift to more sustainable agricultural practices.