Better Late Than Never: The EUDR Is Coming. Here Is What It Means for Business and the Environment

The world’s forests are under severe threat, and a significant driver of this destruction is tied to production and consumption patterns in developed economies, particularly in the European Union.

EU imports account for about 10 to 15 percent of global deforestation per year in particular due to trade in commodities such as cocoa, palm oil, coffee, soy, and cattle products. From 2021 to 2022 deforestation associated with EU imports caused at least 120 million metric tons of CO2 emissions - roughly the equivalent of Nigeria ‘s annual emissions.

To address this, the European Union has introduced the Regulation on Deforestation-Free Products (EUDR), a framework aimed at preventing products linked to logging anywhere in the world from entering and exiting the EU. By enforcing stricter due diligence requirements on businesses, the EU aims to reduce carbon emissions caused by EU consumption and production by at least 32 million metric tons a year.

However, recent developments have delayed the EUDR’s implementation, raising questions about its timeline and impact. Here is a rundown of the EUDR's journey, the reasons for its delay, and its implications for businesses and the environment.

The EUDR’s evolution and significance

The EUDR is a regulation on deforestation that reflects the EU’s efforts to take a leadership role in combating global deforestation. Part of a set of policies known as the European Green Deal, the EUDR aims to ensure that products consumed within the EU no longer drive deforestation or forest degradation worldwide. As a legal act of the EU, the EUDR will become a legally binding and enforceable law in all member states simultaneously once implemented.

The EU finalized and adopted the EUDR’s legal framework in May 2023, mandating robust due diligence systems to verify the deforestation-free status of commodities including cattle, wood, cocoa, soy, palm oil, coffee, rubber, and some of their derived products, such as leather and chocolate. Originally, the regulation’s provisions were set to go into full effect on December 30, 2024.

Recent voting outcomes

On December 4, 2024, the European Parliament and the EU Council reached a provisional agreement to delay the EUDR’s implementation by one year, responding to calls from several corporations, the majority of European agriculture ministries, and non-EU countries including Brazil, Indonesia, and the United States.

The EUDR will now likely become legally binding for large and medium companies on December 30, 2025, and for small enterprises on June 30, 2026.

The European Commission and its member countries rejected major changes to the regulation previously proposed by the European People's Party (EPP) and passed by the European Parliament, including so-called “no risk” country classifications that would exempt some suppliers from detailed due diligence for commodities sourced from areas deemed to constitute zero or negligible risk of deforestation, including those whose forested areas could be considered stable or increasing since 1990. Traders placing products on the European market from “no risk” countries would not have been required to submit geolocation data for production per the EPP’s proposal.

Critics of these proposed exemptions had argued that such measures would open a loophole to circumvent traceability for commodities produced in “high-risk” countries via “no-risk” countries.

Implications for businesses

The EPP has abandoned its proposed amendments. Nevertheless, the EU Commission’s plan to postpone the EUDR’s full implementation appears all but certain, granting an additional 12-month phasing-in period for companies to adjust and comply with the new regulations.

This means that once the regulation enters into full effect, businesses will have to:

• prove that their products are not made with materials linked to land that was deforested after December 31, 2020,
• collect geolocation data for all production sites,
• and comply with the local laws in production countries.

Importers will be responsible for collecting full information related to product origin, geographical indications or any other requirements stated in the EUDR and businesses that cannot provide the necessary information will be prohibited from selling their products on the EU market. Companies who fail to comply will incur a fine of up to 4 percent of their EU turnover.

Some industyr giants and smallholder groups alike indicate they are prepared to comply with the EUDR, including Nestle, Mars Wrigley, and Ferrero, but also cocoa producers in Ghana and the Ivory Coast. They are already employing traceability systems along their production lines and .

Meanwhile, representatives from trade groups and farmers associations in Honduras and Kenya cite unique hurdles. Many lack the resources or infrastructure to meet these requirements, prompting calls for financial and technical support to ensure fair participation in global market. In other instances, such as a notable segment of Ivory Coast’s cocoa industry, supply comes from indirect sources making traceability to comply with the EUDR difficult.

Environmental implications

The delay in enforcement comes at a cost. Each year without EUDR implementation could see 2,300 square kilometers forest loss, almost equivalent to an area the size of Luxembourg, with emissions matching those from 18 million cars.

While the case for extra preparation time remains contested, the delay is expected to allow companies and regulators to ensure more predictability across supply chains. Once implemented, the EUDR has the potential to set a global precedent, driving deforestation-free supply chains and inspiring similar regulations worldwide.

Meanwhile, environmental advocates hope future legislation will also target deforestation exposure from commodities not regulated by the EUDR, such as cashew nuts and maize. Overall such commodities would still account for about 17.5 percent of the EU’s deforestation exposure.

What’s next

The EUDR marks a turning point in global efforts to combat deforestation, despite its delayed timeline. Once endorsed by the EU Council and Parliament, it will be formally adopted by both institutions.

This means the time for action is now.

Businesses should view this extra time as an opportunity to strengthen their supply chains and adopt robust compliance strategies. By doing so, they can position themselves as leaders in sustainable trade and avoid last-minute penalties. Read our recent article to learn why postponing their EUDR compliance strategy is a significant risk that businesses simply can’t afford to take.