Navigating EU Deforestation Regulation: from guidelines to best practices

In December 2024 the Council and European Parliament reached agreement to postpone the mandatory compliance with the EU Deforestation Regulation (EUDR) by one year, extending the deadline to 30 December 2025.

It’s a brief respite. But businesses should not view it as an opportunity to relax. The EUDR is a complex and wide-ranging regulation that demands rigorous compliance. As such, businesses should already be gearing up for its enforcement. Now is the time to strategise, align operations, and seize the opportunity to strengthen market positions.

The EUDR aims to limit the EU’s impact on global deforestation and forest degradation, as well as protecting human rights, including those of indigenous peoples. To achieve these goals, it introduces extensive due diligence requirements for businesses and their supply-chains. These requirements apply to all businesses seeking to import, export or trade in seven key commodities (cattle, cocoa, coffee, palm oil, rubber, soy and wood), along with specific products derived from these commodities (e.g., paper, packaging and leather).

The Regulation introduces a ban on these products being marketed in the EU, or exported from it, unless they are verifiably deforestation-free and produced in accordance with relevant legislation (e.g., regulations covering land use rights, environmental protection, labour and human rights). 

Recognising the time needed for producers, EU businesses and authorities to prepare for the EUDR’s far-reaching requirements, there was significant pressure from stakeholders to postpone enforcement, with a proposal by the European Commission to this effect. As a result, the Council (heads of member states) and the European Parliament confirmed, in December 2024, that the EUDR’s requirements would apply from 30 December 2025 for large companies (and from 30 June 2026 for micro- and small enterprises), resulting in a one-year postponement.

In parallel with their proposal to postpone the EUDR, the European Commission released additional guidance documents. This indicates that even though the EU agreed to give businesses more time to prepare for the Regulation, the EU remains committed to the enforcement of the regulation.

This article provides new insights and best practices to help companies prepare for EUDR compliance based on the guidance the Commission has published.

The Commission published its long-awaited draft guidelinesOpens in a new window and updated FAQs in October 2024 to provide further clarification on the implementation and oversight of the EUDR. These guidelines are not legally binding and cannot replace or amend the text of the Regulation. That said, they provide a useful reference for companies preparing for EUDR compliance. As these guidelines will also be considered by the national competent authorities – the designated agencies in various EU countries, like the Bundesanstalt für Landwirtschaft und Ernährung in Germany – responsible for implementing and enforcing the EUDR’s requirements.

These updated documents address key elements of the EUDR, including the definitions of "placing and making available on the market", "export" and "operator", which help define when the EUDR applies and who needs to comply. The guidance documents also provide additional clarity on areas including product scope, due diligence obligations or certifications and third-party verifications.

Key insights from the guidance documents include:

• Non-EU established companies must perform EUDR compliance
  The guidance documents clarified that both EU and non-EU companies need to perform EUDR compliance. It was previously believed that only EU-based companies needed to perform EUDR compliance, while non-EU companies simply had to provide the necessary information. The new guidance clarifies that non-EU companies placing products on the EU market or importing them are also considered operators under the EUDR. As a result, they must perform due diligence, obtain a Due Diligence Statement (DDS), and include the DDS reference number in customs declarations. This adds to the compliance and administrative responsibilities of non-EU companies.
• Simplification for the Due Diligence Statement
  The new guidance documents clarify that a DDS can cover multiple shipments and batches (previously it looked like a separate DDS would be required for each shipment or batch). However, practical limitations continue to apply, a DDS can, for example, only rely on data on shipments or batches dating back one year. Companies will need excellent administration of traceability to ensure that the correct data in the DDS is linked to the correct shipment, that they keep track of the amounts already imported, and that they renew the DDS when amounts are fulfilled. So, while the guidance does simplify companies’ responsibilities to an extent, getting the details right will still be vital.
• Composite products
  For products containing multiple relevant commodities (so called composite products), due diligence is required only for the main commodity group. For example, a chocolate bar contains cocoa powder, cocoa butter and palm oil, but due diligence is only focusing on cocoa products.
• Certifications and third-party verification schemes
  Certifications can aid due diligence but cannot replace it. When using certifications or third-party verification schemes, businesses must ensure that they comply with EUDR standards like deforestation criteria and geolocations, as well as transparency and accessibility of information.

Companies impacted by the EUDR should continue to move ahead with the plans they have already put in place. Postponement of the Regulation does not mean internal preparations should be delayed or put on hold.   Based on our experience we have seen that on average the timeline for being compliant with EUDR is 10 months. If this is shortened, this might result in an additional need for resources and/or budgets to speed up the process.

The following best practices can be helpful when preparing for EUDR compliance: 

1. Identify and analyse: 

a) Accurately identify products within EUDR's scope and map your entire supply chain.

b) Evaluate how EUDR impacts your business and assess readiness by identifying gaps between current practices and regulatory expectations.

c) Develop a comprehensive roadmap, including supplier engagement plans and IT solutions, to ensure full compliance.

2. Align preparations: 

a) Make full use of the extended timeline: coordinate with your team and synchronise internal preparations to ensure compliance by December 2025.

b) Negotiate with suppliers for EUDR-compliant contracts and secure information needed to meet regulatory requirements.

3. Strengthen supply chains:

a) Review your supply chain for compliance opportunities and capitalise on insights to enhance your market position.

b) Discover new opportunities for value creation and reinforce your competitive edge. 

4. Integrate compliance strategies:

a) Navigate the evolving regulatory landscape by integrating compliance, data strategy and data gathering strategies across all sustainability regulations (CSRD, EUDR, CSDDD, EU Green Deal, EU Forced Labour Regulation etc). If you already require information for e.g., CSRD, combine the requests to avoid going back to your suppliers' multiple times.

The postponement of EUDR enforcement provides your business with an outstanding opportunity to fine-tune your compliance strategy and uncover synergies that drive business growth. To better understand the impact of EUDR on your company, please find more articles from the PwC Network below or reach out to your PwC contacts.