The European Union Deforestation Regulation (EUDR) is replacing the European Union Timber Regulation (EUTR), marking significant changes for businesses involved in the timber trade. While EUTR focused on preventing illegal logging, EUDR broadens the scope to include requirements on the products to be deforestation free and precise geographic origin of the goods. Key differences include expanded product coverage, more stringent due diligence requirements, and enhanced enforcement. This guide breaks down the EUDR's implications, comparing it to the EUTR and providing practical insights for compliance.
Overview: From EUTR to EUDR
The European Union Timber Regulation (EUTR), in effect since 2013, was primarily designed to prevent illegally harvested timber from entering the EU market. It established due diligence requirements for businesses to verify that the wood they were trading came from legal sources.
However, the new European Union Deforestation Regulation (EUDR), introduced in 2023 and to be implemented by the end of 2025, takes this approach a step further. Not only does it cover the legality of timber harvesting, but it also aims to combat global deforestation by regulating several commodities beyond timber, including soy, palm oil, and cocoa. EUDR places a greater emphasis on sustainability, requiring companies to prove their supply chains are free from deforestation or forest degradation.
Key Differences Between EUDR and EUTR
The key differences between EUDR and EUTR reflect the shift from merely avoiding illegal logging to actively eliminating deforestation from supply chains. EUDR expands product scope, mandates stricter due diligence, and sets more rigorous compliance standards. The following sections will look more closely at these changes to provide clarity for businesses that need to adapt to this regulatory transition.
Expanded Scope and Product Coverage
Under EUTR, the focus was specifically on timber and timber products, whereas EUDR broadens the scope to include a range of other agricultural commodities. This expansion significantly impacts businesses that may not have previously needed to consider such compliance.
The inclusion of commodities like palm oil, soy, and beef means that companies operating in these sectors must now evaluate their entire supply chain for deforestation risks. This expanded scope reflects the EU's increased ambition to curb global deforestation beyond the timber industry.
However, even for companies dealing exclusively with timber there are some scope changes to consider. The EUTR focused mainly on the actors that first place the goods on the EU market - so called operators. An operator can be an importer or the actor making the logs available on the market. The provisions for EU actors buying and selling this timber on the internal EU later on in the supply chain, traders, essentially only extended to keeping track of your customer, supplier and the goods.
The EUDR expands the scope to increase the obligations of traders. Large traders are now considered as large operators as per article 5.1 of the EUDR. This means that many companies not directly affected by the previous regulation now will have to implement and follow a due diligence system.
Additionally, the EUDR does not only govern timber imported into the EU market or placed on it by domestic operators but also applies to exported material. A company that exports a product listed in the EUDR from the Union will not be able to do so without referencing a due diligence statement submitted in accordance with the regulation.
Due Diligence Requirements Comparison
Due diligence under EUTR required businesses to conduct a risk assessment to ensure that timber was legally harvested. With the introduction of EUDR, due diligence now includes additional elements such as geolocation data and evidence of deforestation-free supply chains.
Comparison Table: Due Diligence Requirements
The basic structure of the required due diligence is the same for EUTR and EUDR, i.e.:
- Information Gathering
- Risk Assessment
- Risk Mitigation
Obviously, with the expanded scope there will be more work to put in at each step. As part of the information gathering, businesses are expected to provide precise geolocation coordinates for the land where commodities were produced. This geolocation requirement means companies must cooperate with upstream actors in their supply chains to obtain this information. It will also include careful mapping of the supply chain to make sure the risk assessments are exhaustive, covering all sources of the material in the batch. This can be a major challenge for companies with complex supply chains or products such as plate material that mixes timber from a variety of sources in production.
At the risk assessment stage these geolocations should be used to evaluate whether any deforestation or forest degradation has taken place in the plots of land from where the product originates. While not mandatory to use satellite pictures, there are signs that that will be one of the more convenient ways to comply.
If any non-negligible risks are found those need to be mitigated at the last stage. A new scenario of a risk to mitigate may be that the plot of land indicated as source of the material does not produce the product in question. In such a situation the operator would need to ascertain that the product in fact does originate there, perhaps through an on-site audit.
Country risk level
The EU will assign each country a risk level according to article 29 of the EUDR. The EUTR did not have a similar set up and the EU did not make this kind of risk assessments. Currently all countries are classed as standard risk. Eventually, countries will be grouped into low risk, standard risk and high risk. Standard risk and high risk countries will not require different kinds of due diligence, however, due diligence has to be done according to the situation at hand. What will differ between those two levels of risk is the frequency the due diligence statements will be checked and audited with more checks being performed on products from high risk countries.
Products from low risk countries will benefit from an exemption where the operator only needs to gather the necessary information but not perform risk assessment or risk mitigation unless there are any concerns about the compliance of the products.
Small and middle-sized companies
The size of companies matter in the EUDR whereas they did not in the EUTR. Small and middle-sized companies (SMEs) will not have to conduct due diligence on goods which have previously been subject to due diligence according to EUDR article 8. This means that a downstream operator that is also a SME has significantly less work to do to comply with the EUDR. More information can be found on the EUDR site for SMEs.
Compliance and Documentation Changes
A big difference between the EUTR and EUDR is that as a final step of the due diligence procedure the EUDR also requires the operator to submit a due diligence statement in the European Union information system developed especially for the EUDR. This due diligence statement is a statement that the goods are compliant with the requirements in the EUDR. The EUTR doesn't have a similar requirement.
Traders and down-stream operators need to ascertain that the due diligence done by the original operator has been done, as per 4b in the Guidance document.
Large companies will, according to EUDR article 12, need to report on their due diligence system annually and spread this report widely - the EUDR explicitly mentions the internet in this context. This is not a requirement in the EUTR and perhaps brings some additional transparency.
Both regulations require companies that work with affected products to maintain their due diligence systems and to keep documentation and proof of compliance for at least 5 years.
Enforcement and Penalties
Each country has a Competent Authority (CA) responsible for fulfilling the EU member states responsibilities outlined in the EUDR. For example, in Germany, the Federal Office for Agriculture and Food (BLE) acts as the Competent Authority, while in Sweden, the Swedish Forest Agency takes on the role of Competent Authority. These authorities are responsible for conducting checks, monitoring compliance, and ensuring that businesses fulfill their due diligence obligations. As can be expected the CAs are the same in most cases for the EUTR and EUDR.
It is noteworthy that while not every actor is obligated to carry out a full due diligence process in every case - think for example of a downstream operator - every actor that has obligations according to the EUDR are liable in the case where the goods are non-compliant. A downstream actor cannot blame an upstream actor and they are both at fault according to the EUDR.
The penalties under EUDR are more severe, aiming to deter non-compliance through financial penalties proportional to the environmental harm caused. For example, both EUTR and EUDR state "fines proportionate to the environmental damage" can be levied but the EUDR sets a minimum level of the maximum fine where the EUTR left that open. The EUDR also explicitly states that the CAs have the right to confiscate any revenues made from the non-compliant goods. These penalties apply across the entire supply chain.
Another peculiarity of the EUDR is that the European Commission will publish a list of offenders and their crime on its website.
Timeline for Transition
Lately there has been some confusion about the implementation date of the EUDR. Recently the European commission voted on a proposal to delay it by a year, 31 December 2025.
In the guidance published in October 2024 the following was stated regarding timber products that were previously governed by the EUTR:
For timber and timber products produced before 29 June 2023:
- Placed on the market before 30 December 2024: such products must comply with the rules of the EUTR.
- Placed on the market from 30 December 2024 until 31 December 2027: the rules of EUTR continue to apply.
- Placed on the market from 31 December 2027: such products shall comply with Article 3 of the EUDR.
For timber and timber products produced from 29 June 2023 until 30 December 2024:
- Placed on the market before 30 December 2024: such products must comply with the rules of the EUTR.
- Placed on the market from 30 December 2024: such products must comply with the rules of the EUDR.
- Timber and timber products produced from 30 December 2024 must comply with the rules of the EUDR.
It remains to be seen which cutoff dates will be chosen for the new implementation date. While an additional year until implementation may seem like a long time it is time to start preparing already now in order to be fully ready at the end of 2025.
Cost Implications
The broader scope and more stringent due diligence requirements under EUDR can increase operational costs. Companies need to allocate resources for technology investments, additional staff training, and enhanced supply chain monitoring. However, non-compliance can lead to hefty fines, making these upfront investments crucial for long-term stability.
Non-compliance should be taken seriously and it is important to follow your due diligence system even if it may lead to higher costs. It can be a good idea to consider switching suppliers if a particular product turns out to be hard to trace and conclude negligible risk for.
Action Plan for Businesses
To successfully navigate the regulatory shift from EUTR to EUDR, companies need a clear action plan. This plan should include:
- Supply Chain Mapping: Identify and map the origin of all commodities, ensuring geolocation data is available.
- Find Tools: Invest in tools and technology to support the collection, storing and analysis of the required information according to your position in the supply chain.
- Due Diligence System Update: Update your due diligence system to take into account the new requirements.
- Training and Awareness: Educate internal teams and suppliers about new compliance requirements.
FAQ Section
What Are the Key Differences Between EUTR and EUDR?
EUTR focused on preventing illegal logging, while EUDR adds deforestation-free supply chains and includes more commodities.
How Does EUDR Affect Small Businesses?
In many situations small businesses are exempted from the heaviest requirements of the EUDR, however, they will still need to have a good understanding of the obligations and responsibilities.
What Technology Is Needed for EUDR Compliance?
Companies will need GPS-based tracking systems and data management tools to ensure supply chain transparency.
Conclusion
The transition from EUTR to EUDR marks a significant regulatory shift for businesses operating in the EU timber and agricultural commodities markets. With expanded scope, stringent due diligence, and more harmonized enforcement, companies need to adapt quickly to remain compliant. By understanding the key differences and preparing adequately, businesses can navigate this complex transition effectively and contribute to a more sustainable future.
Understanding your company's role in each transaction is important in order to take the correct steps. SMEs enjoy significantly lighter requirements and so does sourcing from low risk countries. Still, in both those cases the company is liable for any non-compliance.
Some good first steps are mapping your supply chain and determining which actions you need to take in each case to be compliant with the EUDR and to start informing suppliers about the information you will need to start collecting, especially in regards to geolocation.
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