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EU Deforestation Regulation: New Sustainability Standards
From late 2025 (2026 for SMEs), the EUDR will require businesses trading in high-risk commodities such as cattle, cocoa, coffee, soya, rubber, oil palm, and wood to prove their products are deforestation-free, degradation-free, legally produced, and backed by due diligence statements. Non-EU businesses may also need to provide compliance documentation to support EU partners, with penalties for breaches including fines, seizures, and trading bans.
1 minute read
Published 30 September 2025
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Nigel Brahams
Partner - Head of Financial Services
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Lachlan Okoye
Trainee Solicitor
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Key information
- Specialisms
- Business
- Services
- Corporate reputation management
The European Union Deforestation Regulation (EUDR) will take effect on 30 December 2025 (30 June 2026 for small and medium-sized enterprises (SMEs)). This marks a major shift in EU trade policy, moving away from a legality-based system (where production is deemed sufficient if it adheres to local laws) towards a more sustainability-driven standard (where production must now also meet environmental guidelines).
The Regulation applies to seven key commodities considered high risk:
- Cattle
- Cocoa
- Coffee
- Oil palm
- Rubber
- Soya
- Wood
This includes their derived products, such as chocolate, books and leather. Only goods produced after 29 June 2023 are covered, while recycled products remain exempt.
What are the key rules?
Companies must not place, or export covered products within the EU unless the products are:
- Deforestation-free: i.e. after 31 December 2020, there cannot have been any forest conversion to agriculture, but the forest can naturally regenerate.
- Forest Degradation-free: i.e. there cannot have been a structural change to the forest, such as conversion into plantations. Conversion to urban development or infrastructure is permitted.
- Legally produced: In compliance with all applicable laws in the country of production.
- Accompanied by a due diligence statement. Simplified due diligence will be available for products sourced from low-risk regions.
Even if you are a non-EU business, you may potentially need to provide upstream compliance documentation to support your EU partners.
What are your due diligence obligations?
Operators must retain records for at least five years and ensure full traceability of supply chains. Businesses must collect information such as land geolocation, supplier data, and carry out routine audits or risk mitigation/assessments according to country risk levels.
How will this be enforced?
EU member states will conduct unannounced inspections and will verify compliance through the new due diligence system; penalties for breaches include:
- Fines of up to 4% of EU annual turnover
- Seizure of goods
- Exclusion from public contracts
- Trading bans.
To prepare, businesses should begin mapping supply chains related to provenance, assessing risks of deforestation, implementing due diligence systems, training staff, and monitoring EU guidance ahead of the 2025 deadline. Some businesses are considering using secure and immutable Blockchain ledgers to provide a record of ethical and sustainable sourcing. Developments can be monitored here:
Deforestation Regulation implementation – European Commission
Related content
Shorter Reads
EU Deforestation Regulation: New Sustainability Standards
From late 2025 (2026 for SMEs), the EUDR will require businesses trading in high-risk commodities such as cattle, cocoa, coffee, soya, rubber, oil palm, and wood to prove their products are deforestation-free, degradation-free, legally produced, and backed by due diligence statements. Non-EU businesses may also need to provide compliance documentation to support EU partners, with penalties for breaches including fines, seizures, and trading bans.
Published 30 September 2025
Associated sectors / services
Authors
The European Union Deforestation Regulation (EUDR) will take effect on 30 December 2025 (30 June 2026 for small and medium-sized enterprises (SMEs)). This marks a major shift in EU trade policy, moving away from a legality-based system (where production is deemed sufficient if it adheres to local laws) towards a more sustainability-driven standard (where production must now also meet environmental guidelines).
The Regulation applies to seven key commodities considered high risk:
- Cattle
- Cocoa
- Coffee
- Oil palm
- Rubber
- Soya
- Wood
This includes their derived products, such as chocolate, books and leather. Only goods produced after 29 June 2023 are covered, while recycled products remain exempt.
What are the key rules?
Companies must not place, or export covered products within the EU unless the products are:
- Deforestation-free: i.e. after 31 December 2020, there cannot have been any forest conversion to agriculture, but the forest can naturally regenerate.
- Forest Degradation-free: i.e. there cannot have been a structural change to the forest, such as conversion into plantations. Conversion to urban development or infrastructure is permitted.
- Legally produced: In compliance with all applicable laws in the country of production.
- Accompanied by a due diligence statement. Simplified due diligence will be available for products sourced from low-risk regions.
Even if you are a non-EU business, you may potentially need to provide upstream compliance documentation to support your EU partners.
What are your due diligence obligations?
Operators must retain records for at least five years and ensure full traceability of supply chains. Businesses must collect information such as land geolocation, supplier data, and carry out routine audits or risk mitigation/assessments according to country risk levels.
How will this be enforced?
EU member states will conduct unannounced inspections and will verify compliance through the new due diligence system; penalties for breaches include:
- Fines of up to 4% of EU annual turnover
- Seizure of goods
- Exclusion from public contracts
- Trading bans.
To prepare, businesses should begin mapping supply chains related to provenance, assessing risks of deforestation, implementing due diligence systems, training staff, and monitoring EU guidance ahead of the 2025 deadline. Some businesses are considering using secure and immutable Blockchain ledgers to provide a record of ethical and sustainable sourcing. Developments can be monitored here:
Deforestation Regulation implementation – European Commission
Associated sectors / services
- Corporate reputation management
Authors
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Article contributors
Nigel
BrahamsPartner - Head of Financial Services
Specialising in Corporate, Commercial, Digital, Financial regulatory, Financial Services and Private equity
Lachlan
OkoyeTrainee Solicitor
Specialising in Training
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