January 2025 Update

As expected, the European Parliament and Council have approved a one-year implementation delay of the EU Deforestation Regulation. Large companies will be required to comply by December 30, 2025 and, small companies by June 30, 2026. The request to add a “No-risk” country category was rejected meaning that the due diligence requirements will apply to all source countries.

The Commission will finalize a country benchmarking system by June 30, 2025. This system will classify countries as low, standard, or high-risk. While products sourced from countries at all risk levels will require due diligence processes, companies should be aware of this date as products sourced from high-risk countries may be placed under enhanced scrutiny.

For a more comprehensive summary of EUDR and its implications, we encourage you to revisit our original blog post below. Need help navigating the complexities of EUDR and ensuring your business is compliant? Third Partners offers expert guidance and tailored solutions to help you meet the new requirements. Contact us today for a free consultation.

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The European Commission recently announced its proposal to delay the compliance implementation timeline of the Deforestation Regulation by 1 year. As the European Parliament and Council are expected to approve this change, it is critical for every company that engages with the European marketplace to understand the terms and implications of the postponement.

This article explores the reasons behind the delay and recommends preparation measures that address the revised deadlines and regulations. Consider these strategies to overcome the inherent challenges of EUDR compliance.

What is the EU Deforestation Regulation (EUDR)?

The European Union Deforestation Regulation (EUDR) is a landmark policy aimed at minimizing the EU’s contribution to deforestation and forest degradation worldwide. With a primary goal of preventing products that are linked to deforestation from entering the EU market, the EUDR imposes strict requirements on companies that import or trade commodities associated with tree removal.

Under the EUDR, companies are required to:

  • Conduct Due Diligence: Verify that commodities are produced legally and deforestation-free
  • Trace Supply Chains: Provide specific geographical history of commodities
  • Submit Declarations: Present due diligence statements before introducing products to the EU market.
  • Maintain Records: Document proof of compliance for at least five years.

Together, these requirements promote sustainable supply chains for commodities associated with deforestation and enhance transparency and accountability among involved stakeholders.

Which U.S. Companies are Impacted by the EUDR?

A U.S. company that directly uses, produces, or trades one or more of these deforestation-linked commodities is obligated to comply with the EUDR:

  • Cattle, Cocoa, Coffee, Palm Oil, Soya, Rubber & Wood

Additionally, companies that indirectly market or rely on the byproducts of these commodities are also subject to regulation. Examples include chocolate, furniture and paper manufacturers.

Proposed New Phase-in Schedule

Once approved, the EUDR compliance deadlines will shift according to company size:

  • Large Companies: December 2025
  • Small & Medium-sized Enterprises (SMEs): June 2026

Reasons for the Implementation Delay

Several factors borne from the complexity of EUDR implementation informed the decision to postpone the compliance schedule. These factors include:

  • Supply Chain Tracing: Stakeholders concern with the time commitment and difficulty level of tracking the exact origins of commodities
  • Insufficient Technology: Significant lead time is required to properly develop and implement an advanced tracking system capable of meeting the due diligence requirements.
  • International Trade Protection: Rushed efforts potentially increase the likelihood of global trade disruption, especially risky for exporting countries whose economies, and citizens, depend upon the targeted commodities.

Challenges with New Due Diligence Requirements

Businesses in the EU face new due diligence requirements to ensure that deforestation-linked commodities, or products made from these commodities, are not sourced from deforested or converted land.

Under strengthened traceability obligations, U.S. companies will face significant challenges as they attempt to:

  • Allocate financial resources for supplier engagement
  • Collect precise information across the supply chain
  • Structure & manage high volumes of supplier data
  • Indicate exact plot-level origins of at-risk products
  • Identify forest management unit-level locations using geospatial data

The Postponement Creates an Opportunity for Better Preparedness

With an additional year to prepare for the new compliance deadlines, companies are given an opportunity to establish more robust implementation strategies and long-term compliance mechanisms. If used properly, companies and governments can more effectively allocate resources, incentivize responsible sourcing, engage employees and implement due diligence systems.

How Can Third Partners Help?

Third Partners streamlines compliance efforts by helping companies:

  • Develop an EUDR-compliant DDS (Due Diligence System)
  • Perform risk assessments to pinpoint problematic suppliers, sub-suppliers and materials
  • Develop and automate supplier engagement programs through SOPs, surveys, supplier incentive program design, database management
  • Provide independent cost-benefit assessments of supply chain traceability technology
  • Conduct custom GIS-based analysis using best available data to indicate origin of at-risk commodities
  • Validate accuracy of supply chain data prior to submitting to EUDR compliance portal

Contact us today for a complimentary consultation and discover how we can support your company’s commitment to supply chain sustainability and EUDR compliance.